260 luciano pezzolo
It is useful to consider the benefits Venice enjoyed in the eastern Medi-
terranean compared to its competitors using the concept of transaction
costs. These are the costs that regard a particular exchange, in this case of
commercial nature. The actors must accept some burdens which, beyond
those of production, concern the acquisition of information, eventual
costs for enforcing contracts and rules, security, transport, and the like.8
The centuries-long presence of Venetian merchants in the trading
centers of the Near East had allowed for an accumulation of knowledge
and expertise, which over time was transformed into a consistent com-
petitive advantage with respect to their competitors. Several observations
of merchants from Lyon in the first half of the 16th century effectively
summed up the question. The Italian merchants disposed of technical and
commercial instruments, experience, a knowledge of Levantine markets,
and an ability to manage money. If Frenchmen had borrowed from Vene-
tians or Italians, they generally had to pay interests of 30–40 per cent at
Aigues-Mortes. Moreover, the Italians residing in Levantine fondaci knew
exactly when to purchase spices. Also, the voyage was of shorter duration
between Venice and the East. The result was that spices coming from Ven-
ice cost 20 per cent less than those imported directly by the merchants
of Languedoc.9 The ability to take advantage of opportunities offered by
the market, the control of or, at least, the skilled manipulation of inter-
national financial networks, and the exploitation of efficient vessels were
the tools that made the Venetians the protagonists of trade between the
Near East and Europe.
The position the merchants of the Serenissima achieved permitted a
notable reduction in transaction costs and protection costs, forcing their
competitors, in contrast, to sustain higher ones. Relying particularly on
Venetian history, Frederic Lane underlined that the costs of protection
must be considered in and of themselves when calculating total produc-
tion costs: “Different enterprises competing in the same market often
pay different costs of protection, perhaps as tariffs, or bribes, perhaps in
some other form. The difference between the protection costs forms one
element in the income of the enterprise enjoying the lower protection
8 Douglass C. North, “Institutions, Transaction Costs and Economic Growth,” Economic
Inquiry 25 (1987), 383–99.
9 Richard Gascon, Grand commerce et vie urbaine au XVIe siècle. Lyon et ses marchands
(environs de 1520—environs de 1580), 2 vols (Paris, 1971), 1:84.