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The Zollverein was the first international customs union, essentially defining these particular trade agreements. This paper utilizes the predictions of a game theoretic model to analyse the observed sequence of accessions into this union. Coalition externalities, the effects the accession of one state has on states remaining on the outside, are the central mechanisms explaining the negotiations between Prussia, the agenda setter, and other German states. This is demonstrated by detailing these financial, strategic and political externalities and demonstrating their influence on trade policy decisions.

Urbanization has been extensively used as a proxy for economic activity. The urban status of settlements is usually determined by an ad hoc population size threshold. This paper proposes a new threshold, taking into account the effect of local agricultural endowments. The new population threshold is a population size, such that for smaller settlements these endowments influence their size, while for larger they do not. This results in an endogeneous, data based threshold. The idea is practically shown for Saxony in the 19th century. The relevance of a different classification is demonstrated in four particular examples, the development of urbanization over time, Gibrat's law, the impact of geography on town locations and the spatial relationship between towns and villages. The results demonstrate that the underlying classification scheme matters for the conclusions drawn from urban data.

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