Presenter: Yasuo Takatsuki
(Research Institute for Economics & Business Administration, Kobe University)
Title:“Complementarities between Long-Term Relationships and Short-Term Contracts: Case of Early Modern Japan”
(joint work with Hideshi Itoh and Takashi Shimizu)
Date: Friday, January 16, 2026, 13:30–15:00
Venue: Only in-person at Conference Room, 6th floor, Osaka School of International Public Policy Building, Toyonaka Campus
Registration: yuri-kitabayashi@iss.u-tokyo.ac.jp（東京大学中林研究室 北林様宛)
Abstract:
This paper examines the interaction between formal and relational enforcement in early modern Japan, focusing on financial relationships between Daimyo (regional lords) and merchants. Due to class distinctions, loans from merchants to Daimyo lacked legal enforceability, while contracts among merchants were court-enforceable. Some merchants built long-term self-enforcing relationships with Daimyo (becoming Tachiiri), whereas others provided short-term formal loans to underfunded Tachiiri. We develop a model with two markets—one that matches Daimyo with merchants, and the other that matches underfunded Tachiiri with lending merchants—and identify conditions for their co-existence in equilibrium. The analysis shows that merchants value becoming Tachiiri for long-term gains, and that the opportunities for short-term formal lending enhance the sustainability of relational contracts between Daimyo and Tachiiri.
The Osaka Workshop on Economics of Institutions and Organizations
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The meeting is organized in collaboration with International Public Policy Seminar
OSIPP Lunch Seminar (17 December, 2025)