Markets in late medieval northwestern Europe: The organization of exchange in a commercializing world

Abstract

The development of a dense network of formal markets authorized and supervised by central or local authorities in late medieval northwestern Europe is closely related to the commercialization that characterized the region in this era. Seen from the perspective of New Institutional Economics, these markets facilitated exchange by reducing transaction costs in more than one way. Firstly, they lowered search costs by attracting concentrations of buyers and sellers. Secondly, they reduced the security costs: as controlled environments for exchange they offered protection to the person and property of buyers and sellers. The legal status of fairs in particular facilitated contract enforcement, promoted a speedy adjudication of commercial conflicts and provided immunity from arbitrary arrests. Finally, markets lowered information costs. They offered systems to promote the transparency of price formation, varying from the regulation of food prices to prohibitions on speculation and auctioning systems; they also allowed for better supervision of product quality, especially of perishable foodstuffs; and they acted as focal points for systems for the control of weights and measures. Thus, late medieval markets answered to what buyers and sellers required: they provided the basic conditions for accessible, transparent and equitable exchange.