Avner Greif, AInstitutions and International Trade@ in SSP.

Theory and Case Study Evidence

Impact Analysis:

Good = Long distance trade.

Monitoring cost.

Moral Hazard.

Principle-agent problem.

Commitment problem.

Information asymmetry.

1. Maghribs (Coalition system

Familial ties. Employed each other as agents.

Opportunists disciplined by all other Maghribis (multilateral).

Cultural rules.........................

 

2. Genose (Patron system)

Paid unrelated agents a premium Aefficiency wage@ based on past actions.

Financed by a trading monopoly. Based on bi-lateral reputation.

1. Limited extent of the market to tribal members who happened to immigrate.

Multi-lateral punishment was self reinforcing.

Obviated need for comprehensive contracts by defining cheating.

2. Superior performance.

Agents honest over a wider market.

Change Analysis:

Good = Growing opportunities for gains from trade.

Interrelation between social and political factors and institutions in Genoa..

Ability to initiate collective action and to use coercive power in pursuit of economic ends by a political coalition with a trade monopoly.

Patron system emerged.

This institutional change evolved into further change (path dependence)-- i.e. family firms who did not reduce wages, led to market in family shares which aided capital investment in the expansion of trade investment.

A.A.S. 810\ssp\Greif\November 16, 1999