Economics 286W
Honors Seminar
Spring
2003
Tuesdays 3:30-5
HRM 303
R. N. Langlois
322
Monteith X63472
Office
hours MT 1:30-3 or by appointment
Assignment 2
Our next faculty presenter, Metin Cosgel, will talk about a new paper of his called “Risk, Transaction Costs, and the Economics of Ottoman Taxation.” As you will see, the paper seeks, among other things, to explain why the Ottoman rulers chose the methods of taxation they did. His answer is that transaction costs seem to matter more than either historical accident or other economic explanations like risk sharing. Your assignment is to consider the following questions.
1. What does Cosgel mean by transaction costs, and why would the Ottomans want to choose methods of taxation so as to minimize these costs? Give examples from the paper (or elsewhere if you like) that seem to fit the argument.
2. If some kinds of economic activity are difficult to measure (because they do not take place in markets or because they have many dimensions or attributes), how is taxation likely to distort economic behavior?
The following article may be of some help in understanding the transaction-cost issues:
- Yoram Barzel, "Measurement
Costs and the Organization of Markets," Journal of Law and
Economics 25(1): 27-48 (April 1982).
You don’t necessarily need to know a lot about the Ottoman Empire to write this paper, but you can (and should) learn more by consulting the Encyclopedia Britannica entry on the subject.
Due: February 25.
