Sng, Tuan-Hwee; Moriguchi, Chiaki - Institute of Economic Research, Hitotsubashi University - 2013
We develop a principal-agent model to study fiscal capacity in pre-modern China and Japan. Before 1850, both nations were ruled by stable dictators who relied on bureaucrats to govern their domains. We hypothesize that agency problems increase with the geographic size of a domain. In a large...