Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169363
Authors: 
Huning, Thilo R.
Wahl, Fabian
Year of Publication: 
2017
Series/Report no.: 
Hohenheim Discussion Papers in Business, Economics and Social Sciences 22-2017
Abstract: 
To better understand the role of taxation in the emergence of states, this article presents an incomplete contract model of an agricultural society in which information asymmetries cause inefficient taxation, and hence outmigration, uprisings, and rent-seeking, but also urbanization. We propose a geographic index of information costs, observability, to test our model. Our case study is the Holy Roman Empire, which had a relatively homogeneous institutional framework, state of technology, culture, and ethnic composition across hundreds of observed states, for over 500 years. We find a robust link between observability and states' tax capacity, their size, and their survival.
Subjects: 
state capacity
principal-agent problem
taxation
Holy Roman Empire
JEL: 
O42
D73
Q15
N93
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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