| Abstract: |
What factors affect the diffusion of new economic institutions? This paper
examines this question by exploiting the introduction of the first regularized
patent system, which appeared in the Venetian Republic in 1474. We begin by
developing a model that links patenting activity of craft guilds with
provisions in their statutes. The model predicts that guild statutes that are
more effective at preventing outsiders' entry and at mitigating price
competition lead to less patenting. We test this prediction on a new dataset
that combines detailed information on craft guilds and patents in the Venetian
Republic during the Renaissance. We find a negative association between
patenting activity and guild statutory norms that strongly restrict entry and
price competition. We show that guilds that originated from medieval religious
confraternities were more likely to regulate entry and competition, and that
the effect on patenting is robust to instrumenting guild statutes with their
quasi-exogenous religious origin. We also find that patenting was more
widespread among guilds geographically distant from Venice, and among guilds
in cities with lower political connections, which we measure by exploiting a
new database of noble families and their marriages with members of the great
council. Our analysis suggests that local economic and political conditions
may have a substantial impact on the diffusion of new economic institutions. |