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and on data extrapolated from the AveTransRisk database and unpublished archival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.