Markets in pre-industrial societies:storage in Hellenistic Babylonia in the English mirror

Recent research has shown early economies to exhibit market behavior by using institutions that reduce price volatility. In this paper we focus on storage as a price stabilizing strategy in Babylon using a recent dataset with agricultural prices for the Late Achaemenid and Hellenistic periods (ca. 400 – 65 BC). This dataset allows us to assess the importance of interannual storage (carry-over) in this economy. Comparing this economy with that of medieval England using a cost-benefit analysis, we find, after correcting for the differential crop structure in both regions, a low level of inter-annual storage. Yet, contrary to the expectations of the cost-benefit analysis, the evidence does not indicate a lower interest rate (i.e. costs) in Babylon. This implies that both social structure as well as access to capital markets played a more important role than traditionally assumed in the question of carry-over.