Amsterdam Entrepôt

The Amsterdam Entrepôt is the shorthand term that English-language economic historiographers use to refer to the trade system that helped the Dutch Republic achieve primacy in world trade during the 17th century. (The Dutch prefer the term stapelmarkt, which has less currency in the English language.)

In the Middle Ages local rulers sometimes gave the right to establish staple ports to certain cities. Amsterdam never received such formal rights (unlike e.g., Dordrecht and Veere), but in practice the city established a staple-market economy in the 15th and 16th centuries. This economy was not limited to a single commodity, though at first Baltic grain dominated it. It came into being because the economic and technological conditions of the time required a trade-network based on what is known in economic terms as an Entrepôt, or in other words a central point (for a given geographic area) where goods are brought together and physically traded, before they are re-exported to their final destinations. This need followed from the fact that in those days transportation of goods was slow, expensive, irregular, and prone to disruption, and that supply and demand for goods fluctuated wildly and unpredictably. The risks entailed by these circumstances put a premium on the creation of such a fixed base, where commodities could be stockpiled prior to marketing and final distribution. Furthermore, concentrating storage, transport, and insurance facilities in one place helped reduce transaction costs and keep long-term prices more stable than they otherwise would have been. The entrepôt functioned thus as a central reservoir of commodities, a regulating mechanism smoothing out fluctuations in supply and demand over time and minimizing the effects of interruptions and bottlenecks.

However, the entrepôt performed an additional function, a "derivative" of its primary market-function: the physical proximity of merchants promoted the exchange of information about market forces, prices, and developments in the factors underlying supply and demand. This not only lowered the cost of information-gathering but even led to decreasing marginal information costs. Other things being equal, this externality would lower the total marginal cost of goods trading through the entrepôt. It is a well-known economic fact that in circumstances of decreasing marginal costs, economies of scale occur, which can give an advantage to early entrants that permits them to outgrow their competitors, sometimes even leading to a natural monopoly. This may explain why in the field of entrepôts certain markets (Antwerp, Amsterdam) gained a dominant position for some time, while others (London, Hamburg) were left behind and only came into their own when the special circumstances favoring the other entrepôts came to an end. In the case of Amsterdam those circumstances changed when the technological possibilities of direct trade improved, obviating the intermediating function of the entrepôt.

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