NORTHERN IS BETTER? A QUANTITATIVE TRANSACTION COSTS ANALYSIS OF THE NORTHERN INVASION PHENOMENON, GENOA 1590-1616

This paper quantitatively analyses the role of transaction costs in Northern vessels’ operating expenses versus their Mediterranean competitors between 1590 and 1616. It is based on an understudied risk-sharing institution, General Average (GA), and on data extrapolated from the AveTransRisk database and unpublished archival sources. We apply a Structural Vector Autoregression Model (SVAR) analysis by considering the Northern Invasion phenomenon as a series of structural shocks on Mediterranean seaborne trade. The SVAR model will test how the greater reliability of Northern vessels, constantly highlighted by the literature on the Northern Invasion, impacted on the repartition of damages following a GA, considered as a proxy of transaction costs. Results support the interpretation according to whom the transaction costs played a relevant role in the persistency of the Northern Invasion in the Mediterranean Sea.