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RESEARCH PRODUCT

Self-Enforcing, Public-Order Institutions for Contract Enforcement: Litigation, Regulation, and Limited Government in Venice, 1050–1350

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The spectacular economic growth of Venice during the late medieval period (1050–1350) was based on the expansion of its trade along the Mediterranean and beyond. Crucial to this expansion was the mobilization of large amounts of capital into risky investments. However, this mobilization required the development of institutions that protected creditors and shareholders from expropriation by controlling merchants. This chapter finds that legal and administrative institutions conjointly provided investor protection and explores the interactions between these public-order institutions for contract enforcement and the emergence of a limited government, a coercion-constraining institution that motivated judges and regulators to use their coercive power for protecting rather than abusing investor rights.