Capitalism and (or) Age of Commerce: the peculiarities of market exchange in the early modern era

Abstract

While market exchange is usually assumed to be taking place between a buyer and a seller within a discrete transaction, early modern merchant practice departed from this model in crucial ways. Because of highly segmented markets and a lack of freely available information on both product qualities and customer tastes, economic agents had to rely on networks of experts, which led to a deeply asymmetrical distribution of information and high barriers to entry. Consequently, as illustrated in a few case studies drawn from Bordeaux and Philadelphia and from the transatlantic and local trade in sugar, coffee, flour, and various local staples in the Eighteenth century, most local markets at the time may have been characterized by strong oligopolies and oligopsonies made up of merchant intermediaries, which dominated smaller operators. Analyzing transactions in isolation does not make much sense, therefore, since these transactions were always dependent on this larger confrontation.