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Contract Enforcement in the English East India Company

Published online by Cambridge University Press:  16 June 2005

SANTHI HEJEEBU
SANTHI HEJEEBU
Affiliation:
Assistant Professor, Department of Economics and Business, Cornell College, 600 First Street West, Mt. Vernon, IA 52314-1098. E-mail: [email protected]
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Abstract

Long-distance trade depends crucially on the enforcement of long-distance contracts, those in which principals are significantly removed from agents. The problem of contract enforcement in the English East India Company reflected a multi-task principal-agent problem in which servants traded publicly for the company and at the same time conducted their own private trade. Private trade, sustained by the private use of company resources, and dismissals were the mechanisms that made East India contracts work. Mechanisms that served little purpose were salaries and pre-employment bonds.

Type
ARTICLES
Information
The Journal of Economic History , Volume 65 , Issue 2 , June 2005 , pp. 496 - 523
Copyright
© 2005 The Economic History Association

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