Global Economic Governance During the Middle Ages: The Jurisdiction of the Champagne Fairs

This article reviews the history literature on the Champagne fairs and points to reasons why Avner Greif's (2006) model of collective responsibility and inter-city reprisals may not apply. First, with no substantial local community of merchants, mutual dissuasion could not offer credible guarantees against the risk of extortion: a bargain with the Fairs’ rulers has to be envisaged. Second, the history literature shows that the unique success of this trading platform rested on a limited-access, extra-territorial jurisdiction, with a de facto global reach: contracts and judgments issued at the Fairs were expected to be enforceable across Europe, via a mix of agreements and power struggles with local, municipal courts. The threat of reprisals worked merely as a reflection of the specific market power first accumulated by the Fairs, and then lost. Hence, analytically, they may still be envisaged as an equilibrium institution. Insolvency, rather than pure moral hazard, is used as the reference case for market disorder, calling for formal interaction between jurisdictions.