Bad Beer and Beer Debts: Asymmetries of Information, Trade Credit, and Brewers Guilds in Early Modern Holland

Abstract

"This case study of the brewers guilds in Haarlem and Rotterdam during the seventeenth century argues that these guilds worked together in conjunction with the town magistrates to develop and enforce rules or property rights that solved negative externalities and collective action problems in financial and product markets. Guild rules were means of resolving conflicts between the brewers by structuring property rights. In Haarlem and Rotterdam, the guilds established the principle of exclusive dealing to eliminate negative inter-brand externalities and to reduce the risks that brewers and the towns faced in over-extending credit to customers and in 'dumping' beer. Simultaneously, the brewers guild rules realized the limits of exclusive dealing. Thus, guild rules also allowed the restructuring and renegotiation of contracts and regulated the transfer of customers between brewers. As shown in this paper, initial research suggests that guild and municipal authorities enforced these rules during the seventeenth century."