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Between Monopoly and Free TradeThe English East India Company, 1600-1757$
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Emily Erikson

Print publication date: 2014

Print ISBN-13: 9780691159065

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691159065.001.0001

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Decentralization, Corruption, and Market Structure

Decentralization, Corruption, and Market Structure

(p.107) Chapter 5 Decentralization, Corruption, and Market Structure
Between Monopoly and Free Trade

Emily Erikson

Princeton University Press

This chapter provides further analysis of organizational incentive structures, linking the behavior of individuals to the larger macro structure of trade. The analysis here explores the unintended consequences of the private trade allowances. The unique private trade allowances of the English Company had created a perverse incentive for the captains and crew. Those who were engaged in the private trade (which was most employees) had an incentive to illegally extend their voyages in the East and seek out new commercial opportunities. Company officials condemned this practice; however it had an unexpected impact on the firm. While “losing the season” to extend their voyages, captains took the risks necessary to directly link distant markets within the Company network. Through opportunistic and malfeasant behavior, they wove the many regions and ports into one multilateral commercial network.

Keywords:   organizational incentive structures, private trade allowances, private trade, multilateral commercial network, corruption, market structure

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