Was privateering plunder efficient?

This paper argues that when contracts between enemies are enforceable and transaction costs are low, plunderers and their victims benefit from trade that facilitates the former's ability to plunder the latter. Coasean “plunder contracts” transform part of plunder's social costs into private benefits for plunderers and their victims. A significant portion of the wealth that plunder would otherwise destroy is preserved instead. The result is more efficient plunder. To investigate our hypothesis we consider maritime marauding in the 18th and 19th centuries. Privateers developed a system of ransom and parole founded on Coasean plunder contracts with victim merchantmen.

Research highlights
► Plunderers and their victims have incentives to forge Coasean contracts that reduce plunder's social costs.
► Privateering plunder was partly conducted on the basis of Coasean contracts in the 18th and 19th centuries.
► Coasean plunder contracts created more efficient plunder in 18th- and 19th-century privateering.