Amsterdam Entrepôt
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.
[1] 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.
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 others came to an end.
[7] The physical proximity of a strong financial sector partially explains why after 1590 Amsterdam also became a center for the low-volume, high-value "rich trades" (i.e., commodities like spices, silk, and high-quality textiles).
What did attract the specialists in this type of trade (apart from the favorable financing possibilities) was the influx of skilled workers and entrepreneurs from the southern Netherlands in the 1580s that helped transfer the sophisticated Flemish textile industry to the Republic.
Competitors, like the Hanseatic and English merchants, lost appreciable market share and hence income, especially after the trade embargoes imposed by Spain on Dutch commerce during the Eighty Years' War had been lifted.
However, as the Acts only regulated English and colonial trade (and imperfectly so) and England only managed to dominate a few commodities markets for which it formed the main customer, these attempts were never successful.
Restricting trade between France and the Republic therefore resulted in the roll-back of the specialization that Comparative advantage had engendered in both economies (though at great cost to the French consumer also) and helped throttle the once-flourishing Dutch industries.
During the 18th century this combination of adverse economic and technological developments (promoting disintermediation) and foreign protectionism led to a relative decline of Dutch preeminence in world trade and of the Amsterdam entrepôt.
