Transparency, Contract Selection and the Maritime Trade of Venetian Crete, 1303-1351
Williamson, Dean V.
US Department of Justice, July (2001)
The paper explores how merchants enabled long-distance trade in the Mediterranean before and after the Black Death. The Black Death disrupted the flows of information about commercial prospects upon which merchants depended for deciding when, where, and in which commodities to trade. With the emergence of plague, merchants lost contacts and agents in geographically dispersed markets, and they were not in a position to immediately ascertain the damage to their informational capital. No less importantly, the disruption of information impinged how merchants contracted the services of trading agents. Using agents enabled merchants to distribute their investments and managerial energies across portfolios of ventures that networks of agents could conduct simultaneously in geographically dispersed markets. Even so, agency introduced a problem of asymmetric information that impinged the design of agency contracts. Agents might cheat merchants by misreporting transactions – transactions that merchants could neither observe nor verify.