income to less than f(xN). This threat may or may not be sufficient to support honest trade, depending on the parameters @, t, and c. That is, an embargo that leaks may or may not be enough to deter the city from violating its agreement. If this kind of embargo is not sufficient, mutual gains may be achievable by strengthening the guild organization and enabling it to make a more powerful threat. The force of any potential embargo depends not only on f(xN) and f(x*) but also on the net rate of profit, t!c, earned by the city. Incentives for honest behavior by the city are stronger when taxes and tolls are high, because the city then has more to lose from an embargo. A strong guild organization can make it feasible to offer lower taxes and tolls while still promoting honest behavior by the city that, in a richer model, could lead to additional advantages in terms of increased value of trade.
A guild with coordination and enforcement abilities may be central to enabling trade expansion. It creates and reflects intertransactional linkages among all ruler-merchant transactions and the ruler’s conduct in each transaction. The guild links information-sharing and coercive (and sometimes also economic) transactions by merchants with the ruler-merchant transaction. By also linking economic and coercive transactions, the resulting institution mitigates the deficiency of the institution described in game 3. The power of the guild enables it to render credible the belief that an embargo by all merchants will follow cheating.
Game 4: The Guild with Coordination and Enforcement Abilities. The last variant is a game in which the guild has the ability to force individual traders to comply. No formal analysis of this case is presented, because the only role of enforcement by the guild against member merchants in the formal model is to prevent trade during boycotts. Accordingly, the results are the same as in proposition 4.3, but traders participate in the boycott because they are required to do so, rather than because they expect participation to serve their individual interests.
4.3 Concluding Comments
Like all models in economics, the model presented here is stylized, abstracting from inessential details in order to highlight particular points. It enables us to capture a historically derived conjecture about the importance of particular intertransactional linkages and how they enabled
income to less than f(xN). This threat may or may not be sufficient to support honest trade, depending on the parameters @, t, and c. That is, an embargo that leaks may or may not be enough to deter the city from violating its agreement. If this kind of embargo is not sufficient, mutual gains may be achievable by strengthening the guild organization and enabling it to make a more powerful threat. The force of any potential embargo depends not only on f(xN) and f(x*) but also on the net rate of profit, t!c, earned by the city. Incentives for honest behavior by the city are stronger when taxes and tolls are high, because the city then has more to lose from an embargo. A strong guild organization can make it feasible to offer lower taxes and tolls while still promoting honest behavior by the city that, in a richer model, could lead to additional advantages in terms of increased value of trade.
A guild with coordination and enforcement abilities may be central to enabling trade expansion. It creates and reflects intertransactional linkages among all ruler-merchant transactions and the ruler’s conduct in each transaction. The guild links information-sharing and coercive (and sometimes also economic) transactions by merchants with the ruler-merchant transaction. By also linking economic and coercive transactions, the resulting institution mitigates the deficiency of the institution described in game 3. The power of the guild enables it to render credible the belief that an embargo by all merchants will follow cheating.
Game 4: The Guild with Coordination and Enforcement Abilities. The last variant is a game in which the guild has the ability to force individual traders to comply. No formal analysis of this case is presented, because the only role of enforcement by the guild against member merchants in the formal model is to prevent trade during boycotts. Accordingly, the results are the same as in proposition 4.3, but traders participate in the boycott because they are required to do so, rather than because they expect participation to serve their individual interests.
4.3 Concluding Comments
Like all models in economics, the model presented here is stylized, abstracting from inessential details in order to highlight particular points. It enables us to capture a historically derived conjecture about the importance of particular intertransactional linkages and how they enabled
การแปล กรุณารอสักครู่..