Did guilds solve market failures affecting the invention and diffusion of innovative knowledge? This paper addresses this question using a database of 17,384 observations of European guilds between c. 995 and c. 1883. It investigates three key activities through which guilds could have promoted innovation: generating monopoly rents; creating spatial agglomerations; and transmitting knowledge by apprenticeship and journeymanship. It finds that guilds indeed created rents, encouraged agglomerations, and mandated training. But guilds also obstructed innovation through technical rules, entry barriers, output quotas, and trade protection. The net effect was to impede innovation by prioritizing appropriability at the expense of competitiveness.
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