Abstract: In the sixteenth century, European countries engaged in long-distance trade with the East. Despite sharing the same objectives and technology, Portugal opted for a crown monopoly, England, the Netherlands, and Sweden franchised trade to private merchants, whereas in Denmark and France, king and merchants shared control. The financial condition of the crown appears to have been relevant for the monarchs' decision. I provide an economic mechanism to illuminate the historical variation in terms of the differences in relative endowments of king and merchants within each country. I also explore the implications of control allocation using archival data on labor compensation and shipping technology. Differences in the long run performance of merchant empires suggest a major impact of organization.

CV: Claudia Rei has an undergraduate degree in Economics by ISEG, a Masters in Economics by New York University and a PhD in economics by Boston University.  Her research interests focus on the economics of merchant empires and the long run impact of economic incentives of kings and merchants at the time. She is an assistant professor at Vanderbilt University and was visiting Universitat Pompeu Fabra in Barcelona in the academic year of 2009-2010.