A theory of the city‐state: The rise and decline of the rule of law in Medieval Italy

Abstract

We leverage theoretical insights from political economy to study several aspects of the institutional development of the Italian city‐states during the High Middle Ages (1000–1350). A society's regime type depends on its domestic balance of power. When the ruled can credibly threaten to punish a rogue ruler, the rule of law prevails. If the ruler can easily overpower the ruled, despotism results instead. The transition from one regime to the other results when exogenous shocks and endogenous dynamics disturb the prevailing balance of power. This framework accounts for the rise and eventual decline of rule of law regimes in the towns of central and northern Italy between the 10th and 14th centuries.