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The Influence of Information Costs on the Integration of Financial Markets: Northern Europe, 1350-1560

The Influence of Information Costs on the Integration of Financial Markets: Northern Europe, 1350-1560

By Oliver Volckat

XIV International Economic History Congress (2006)

Synopsis: As far as economic history is concerned, there have not been many attempts to measure transaction costs. In particular, few attempts seem to have been made with regard to preindustrial history: the problems posed by the lack and poor quality of the data seemed too forbidding. Using a new approach, the present paper aims at remedying this defect, at least as far as Northern and Central Europe between the middle of the fourteenth and the second half of the sixteenth centuries are concerned. The intention is neither to measure the development of the transaction sector nor to establish how the costs developed which had to be incurred in order to enter into specific transactions. Rather, the approach is to split transaction costs into components that are more manageable and about whose definitions agreement is easier to reach than about the concept as a whole, and to measure at least one of these. Additionally, in order to demonstrate the relevance of this cost component, the effects its development had on markets in late medieval and early modern Europe are estimated.

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