The History of the Germans podcast I have been enjoying has just gotten to the Hanseatic League, the trading network dominated by the Germans that came to dominate the Baltic and North Seas in the high middle ages. One the first trade routes was to the then important trade center of Novgorod. A curious question was why this network was so successful. There appear to be a number of factors but one important one has to do with developing a brand to signal quality that ameliorated asymmetric information problems.
And we get another crucial element, the commercial discipline and branding. If you came to Novgorod on your own, assuming you made it at all, it would have been very difficult for you to sell your wares at a good price. Your clients will ask: Is that cloth you sell really the high-quality material from Bruges and not the cheap stuff from Ypres? That salt, could it be mixed with something? Where do I go when I have a complaint and you have gone home?
The brand was supported by an effective governance structure for the traders visiting St. Peter’s Yard in Novgorod.
The members of the St. Peter’s Yard maintained or at least pretended to maintain strict discipline amongst their ranks and if one of their customers had found themselves cheated by one of these merchants, they knew where to go for redress. This created what we would today call a brand. Merchants who came with that fleet became seen as trustworthy. They may be a touch more expensive, but you get what you were hoping to get.
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