Working Paper: NBER ID: w21536
Authors: Dan Bogart
Abstract: Many markets are limited by laws and customs enforced by political and religious authorities. North, Wallis, and Weingast (2009) argue that the transition from limited access requires a series of steps like rule of law for elites and the creation of perpetually lived organizations. This paper studies how these steps were taken in England in the case of the East Indian market. The East India Company had a legal monopoly over all trade between England and modern day India and China, but its privileges and property were far from secure. The king and parliament authorized interlopers to enter the Company’s market and forced the Company to make loans to retain its monopoly. A secure monopoly only emerged in the mid-eighteenth century when political stability and fiscal capacity increased. However, liberalization of the market had to wait several more decades. A fiscal and political partnership between the government and the Company kept its monopoly stable until a confluence of events in 1813 brought it to an end.
Keywords: No keywords provided
JEL Codes: N00; N13; N43; N73
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political instability (O17) | insecurity of the East India Company's monopoly (F54) |
| fiscal incapacity (E62) | insecurity of the East India Company's monopoly (F54) |
| political stability (P26) | security of the East India Company's monopoly (F54) |
| fiscal capacity (E62) | security of the East India Company's monopoly (F54) |
| rule of law for elites (K40) | security of the East India Company's monopoly (F54) |
| perpetually lived organizations (L39) | security of the East India Company's monopoly (F54) |
| consolidated political control of the military (H56) | security of the East India Company's monopoly (F54) |