Summary

Coercion and integration are widely used to reduce transaction costs. The threat of fines is often the most efficient way to make people pay their taxes. M&A consulting firms and the European Union exist because companies and countries perceive value in concentrating some of their functions under one legal entity. Frequently, coercion and integration are virtually indistinguishable. Coercion may depend on whether the parties are integrated: a buyer switches of supplier where an employer fires his employee. Even integration can become a coercive instrument, e.g. the threat of a hostile takeover. This dissertation uses three historical episodes to establish causal relations between coercion and integration. Time helps to pin down facts, whereas new data opens ground to empirical work. The Italian unification in 1861 gives evidence that integration increased coercion. The distribution of tasks between slavery and labor was explained by the willingness of principals to pay for integration in order to access particular types of coercion. Low outside options for the employees, a mild form of coercion, explained the integration of labor in the farming sector in the US South between 1880 and 1940. The conclusions of this dissertation hopefully motivate future research. A better understanding of the waltz between coercion and integration sheds light on the current political tension within the EU, the design of anti-human traffic policies, or the negative relation between GDP per capita and entrepreneurship.