From Worthwhile Canadian Initiative:
The Rhine River is the heart of significant economic activity as a European transport and commercial corridor. Running 1,233 km from the Alps to the North Sea, its rich economic hinterland generates commercial traffic, which made it attractive as a source of revenue for regional lords and masters for centuries. Hence, the numerous castles, which were built at key points to defend the trade route and help extract tolls. By way of comparison, our much longer Great-Lakes St. Lawrence Seaway (3700 km) never developed the fractured payment system – as well as the numerous political entities - that characterized the Rhine. The upper middle route from Strasbourg to Koblenz is lined with picturesque castles and towns – and industrial activity – such as the massive BASF complex in Mannheim.Three points come to mind. First, the economic externalities and path dependent effects of the efforts to control commerce on the Rhine today generate a significant economic benefit in the form of tourism as riverboats ply the waters. The long hand of economic history has created a stunning visual panorama of castles that now capture tourists in hotels and museums. Along with major riverboat cruise lines of Croisieurope and Viking, there are numerous smaller operators, which provide excursions and longer voyages along the Rhine and through the lock system to the rest of Europe via the Danube or the Rhone. I have not been able to find a specific estimate of the economic impact of Rhine River tourism but it must be substantial given the day visits provided into surrounding towns.
See also:Second, there is the microeconomics of entry, exit, and pricing as applied to the rise and fall of Rhine towns and castles. Numerous castles at key choke points – often about every five kilometers – were erected for defensive and tolling purposes. An interesting unpublished paper by Gardner, Gaston and Masson points out that between the years 800 and 1800, 79 different locations served as tolling stations along this commercial thoroughfare. While the rights to toll were awarded by the Holy Roman Emperor, from time to time there were outbursts of non-officially sanctioned tolling activity. As the authors write:“…an Emperor faced a classic complementary monopoly problem: how many toll stations to have, where to site them, and what toll to charge at each. As a basic part of the answer to this problem, Emperors tended to keep the number of stations low. For instance, in 1250 an important date in our analysis--there were 12 stations on the Rhine between Mainz and Cologne [Pfeiffer, p.332] . Siting was a complicated decision, whose components included the local power structure (powerful ecclesiastical or noble interests were likely recipients), spacing (a 5 kilometer minimum seems to have been observed), and defensibility (some of the castles which acted as toll booths survived as military structures until the French invasion of 1689).”While decision-making was quite decentralized, the authors argue that in the end the parties in engaged in collusive practices that resulted in joint profit maximizing Nash Equilibria....MORE
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