Daudin G. (2008) Is my market bigger than yours?

Daudin Guillaume (2008) “Domestic trade and market size in late eighteen-century France”, Oxford University: Discussion Papers in Economic and Social History, 32p.

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Introduction

The sheer size of the British market is rarely assumed to be a major explanation of the Industrial Revolution. Britons were less numerous than many other people on the continent but low transportation costs and higher density may have created a more integrated economy and thus a larger market. In this paper, the author uses the Tableaux du Maximum (statistics collected in 1794) to estimate whether France was significantly less integrated than England (p.2).

These tables offer an approximation of prices for 1790 of the most usually consumed products in the French districts. “Even if one leaves prices aside, these documents provide an impressive list of the origin of goods consumed” (p.7). Earlier studies using the same sources have shown that France was then divided in four major regions, two of them dynamical (around Paris and the Rhone valley) and two others backward (the maritime periphery and the Southwest; p.18).

A first difficulty arises in the study: despite being a single polity, there were significant custom barriers within France. In particular, the country was divided into three tariff zones:

  1. étranger effectif (recently annexed Alsace, Lorraine and Franche Comté) whose products were considered as foreign and had to pay the full entry tax;
  2. provinces reputées étrangères (Artois, Bretagne, Flandres, Guyenne, Languedoc, Provence, Dauphiné and Lyonnais) which weren’t integrated in the custom union but were only subjected to limited entry tax;
  3. Cinq Grosses Fermes (provinces centred around Paris) which were in effect a sort of custom union (p.16).

The author finds that indeed in the majority of goods these interior barriers strongly impacted trade flows. Being both located within the Cinq Grosses Fermes for instance strongly increased two districts’ probability to trade together, inter paribus, often by factor from 1.8 to 9.1 (p.19). Logically, the bulkier (low value to weight) goods were those the less affected by the trade barrier variable since for them distance remained the main challenge (p.20).

The impact of cities

Towns larger than 25,000 only had an impact on the consumption of leather and fuel (p.21), they also had little influence in the location of most productions, except for agricultural goods. However “the presence of a urban center ha[d] a decisive role on whether a distribute[d] goods or not; this puts to the fore the distributive role of towns” (p.22).

Even taking into account the distortive role of internal barriers, for all goods but the bulkier ones, the French markets remained larger than Britain as a whole.

However Britain was significantly wealthier than France, for instance real income per capita was an estimated 110% higher in Britain than in France (p.26). Can this have an impact? Even though the French markets for bulk goods such as iron and coal were smaller than Britain’s due to transportation costs (p.27), French markets for staples of the Industrial Revolution such as textile and hardware were larger than Britain’s and were sufficient to sustain several providing districts thus creating the competition needed to potentially boost innovation.

Conclusion

So British industries did not have an advantage over French ones in terms of potential customers (p.28). But if this somewhat unexpected lack of fragmentation doesn’t shed light on the Industrial Revolution, it helps however to understand how market integration may have help impressive growth during the 18th century (p.29).

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