Roman Grain Trade

For my final blog post, the article I read was about the organization of the grain trade in the early Roman Empire. The article begins by addressing the massive shortage of grain needed to feed the vast population of the Roman Empire. The population was predicted to be right around one million people and they estimate an average of 300 kg of wheat consumed per year per individual. Using these numbers we learn that not only could Rome not produce enough wheat for themselves, but if the entire country produced only wheat it still wouldn’t have been enough to feed Rome alone. The conclusion we draw from this is that Rome must have imported massive amounts to account for the deficit almost entirely by sea.

The main idea of this article is to discuss how they were able to overcome the severe informational issues relating to problems of adverse selection and moral hazard. Given the time period and the technology associated with it, merchants would have no idea if their shipments were successful or not until two to three weeks after either the accident or robbery occurred. The roman government succeeded in clearing pirates from the Mediterranean, essentially eliminating robbery from someone other than the agent, which leaves the bulk of the problem within trust between merchant and agent. This entails the problems associated with moral hazard in that the agent could just steal the load and never return. One interesting thing to note about the market system with the grain trade is that it was merchants.

The article then begins to get into the use of institutions and formal vs informal intervention. There were certain formal institutions in place such as the legal court system, which used fines and blacklisting as punishments. The formal institutions are rather self-explanatory as opposed to the informal institutions which are much more interesting. The article talks about a reputation based informal system where these merchants would for the most part converse with each other and discuss agents. Along the same lines, it was also a convenient way of using these networks to get word out if your agent stole your shipment and let other people look out for it.

The interesting thing about Rome is that they were one of the only civilizations to utilize this combination of both formal and informal institutions to regulate these informational problems. By blending the informal reputation based system with the formal legal based system, they were able to capture much more than those who relied only on one.

-Hayden