Political fragmentation, competition, and investment decisions: the medieval grinding industry in Ponthieu, France, 1150-1250

This article explores the effects of political structure on rulers' monopolistic gains and investment decisions in the context of the medieval milling industry in northern France, 1150-1250. Using Salop's spatial model, this article aims to show that political fragmentation increased investment in watermill construction because it reduced the capacity of rulers to limit competition from neighbouring mills. The calculations demonstrate that competition significantly reduced rulers' income from watermills and that the construction of more than 50 per cent of these mills cannot be economically 'justified' unless rulers' profit maximization over joint production is considered, and revenues from additional labour allocated to wheat production is included.