Bulletin n. 1/2005 | ||
December 2005 | ||
COSGEL METIN M. , MICELI THOMAS J. |
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Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire | ||
in Journal of Economic History (The) , Volume 65 issue 03 , 2005 , 806-821 | ||
Risk and transaction costs often provide competing explanations of institutional outcomes. In this article we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. Although the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth-century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways. | ||