The Case of the Port Wine Sector (1680-1974)
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UNIVERSIDADE TÉCNICA DE LISBOA INSTITUTO SUPERIOR DE ECONOMIA E GESTÃO TECHNOLOGICAL, INSTITUTIONAL AND MARKET STRUCTURE CHANGES AS EVOLUTIONARY PROCESSES: THE CASE OF THE PORT WINE SECTOR (1680-1974) DOUTORAMENTO EM ECONOMIA Marc Jacquinet Orientador: Professor Doutor Francisco Louçã Júri: Presidente: Reitor da Universidade Técnica de Lisboa Vogais: Professor Doutor José Luís Cardoso Professor Doutor Manuel Mira Godinho Professora Doutora Manuela Rocha Professor Doutor Gaspar Martins Pereira Professor Doutor António Barros Cardoso Lisboa, Maio de 2006 UNIVERSIDADE TÉCNICA DE LISBOA INSTITUTO SUPERIOR DE ECONOMIA E GESTÃO TECHNOLOGICAL, INSTITUTIONAL AND MARKET STRUCTURE CHANGES AS EVOLUTIONARY PROCESSES: THE CASE OF THE PORT WINE SECTOR (1680-1974) DOUTORAMENTO EM ECONOMIA Marc Jacquinet Orientador: Professor Doutor Francisco Louçã Júri: Presidente: Reitor da Universidade Técnica de Lisboa Vogais: Professor Doutor José Luís Cardoso Professor Doutor Manuel Mira Godinho Professora Doutora Manuela Rocha Professor Doutor Gaspar Martins Pereira Professor Doutor António Barros Cardoso Lisboa, Maio de 2006 ii Contents: Introduction ...................................................................................................................... 1 1. Object of the research.........................................................................................................................2 2. Method used .......................................................................................................................................4 3. Structure of the thesis .........................................................................................................................6 4. Theoretical background ......................................................................................................................7 Part I - The Theoretical Framework .............................................................................. 11 Chapter I - Some theoretical issues about the nexus between Economics and History 12 1. Notion of vagueness, human action and imprecise probabilities......................................................14 2. Radical uncertainty...........................................................................................................................18 3. Innovation.........................................................................................................................................20 4. Metaphors, analogy and explanation ................................................................................................21 5. The issue of emergence and complexity...........................................................................................22 Chapter II - Three related problems: technological, institutional and organizational (population) changes..................................................................................... 25 1. The definition of technology ............................................................................................................25 2. Explaining technological change......................................................................................................30 3. The economics of technological change from closure to openness ..................................................34 3.1. A process of normalization ......................................................................................................35 3.2. Veblen, Marshall and Knight: some sympathy for history ......................................................37 4. Historical nature of technological change ........................................................................................38 5. Dialectics of innovation and institutions: Another reading of technological change from the point of view of history and evolutionary economics ........................................................................................42 5.1. Statement of the problem of historical processes......................................................................44 5.2. More than a problem of logic....................................................................................................46 5.3. Conclusions..............................................................................................................................47 Chapter III – Economics, evolutionary theory and economic change............................ 49 1. Economic theory and economic change ..........................................................................................49 2. The theory of evolution and evolutionary economics......................................................................50 3. Technological change and beyond...................................................................................................52 4. From Technology studies to knowledge-based activities ................................................................52 5. Diversity of productive activities......................................................................................................53 6. Specificity of sectoral evolution .......................................................................................................55 7. Selection of firms, production units, and technologies.....................................................................56 8. The firm and the Theory of evolution and complexity theory of evolution......................................57 9. Technological Innovation, Knowledge Dynamics and Firms Trajectories.......................................62 9.1. Technology and knowledge ......................................................................................................63 9.2. What does the notion of relevant context mean? ......................................................................64 9.3. Knowledge-driven technology..................................................................................................66 iii Chapter IV – Conclusions – Towards a theoretical history............................................ 70 1. Further considerations on historical time..........................................................................................70 2. (Socio-)Economic structures, institutions, and agency problems .....................................................73 3. Longue durée, long waves and cumulative causation......................................................................76 3.1. Cumulative causation................................................................................................................77 3.2. Multiple cycles.........................................................................................................................77 4. Hysteresis and path dependence ......................................................................................................78 5. Historical time and the quest for abstraction in economics (continued from chapter 1)..................81 6. Paths of change and tradition...........................................................................................................82 Part II – The evolution of Port Wine sector: an Historical account from 1680 to 1974. 84 Introduction .................................................................................................................... 84 1. Theoretical Framework.....................................................................................................................88 1.1. Economics and history: once again...........................................................................................89 1.2. The issue of technological change ...........................................................................................96 1.3 Regulation, institutions and norms ............................................................................................98 1.4. Law and economics and the legal and economic nexus.........................................................101 1.5. Theoretical propositions ........................................................................................................107 2. Background of the Port wine sector: some facts and relevant features...........................................111 2.1. The nature of the space – a theoretical proposition................................................................111 2.2. The geographical and space settings......................................................................................112 2.3. Basic features of the sector ....................................................................................................114 Chapter I – Institutional and technological transformations of the Port wine (1680- 1974): A legal and economic nexus ........................................................... 122 1. Introduction ....................................................................................................................................122 2. General setting................................................................................................................................124 3. Historical heritage at the turn of the 17th century ...........................................................................125 4. Different productive and regulatory regimes..................................................................................131 5. Regimes of regulation and production and the outcome of the trade .............................................132 5.1.