Hi guys! I think I may have discovered something interesting about merchant trade. I doubt I am the first to notice it (considering the game is pretty old), but surprisingly I haven't found it anywhere on the internet.
So, let's start with what everyone knows. The amount of money that a merchant makes depends on:
1) The merchant's finance rating.
2) The value of the resource type (e.g. gold, tobacco, chocolate and ivory seem to be the most expensive ones).
3) The distance of the resource of that type that is closest to your capital. For example, sugar seems to be expensive for England because the closest sugar resource is in Iberia iirc. Dyes are cheap because the first instance of dyes is very close to London. Note that this means that faraway dye resources will also be cheap. So going far away is not always good.
4) Monopoly. Money is doubled if a merchant is trading a resource of which there are two or more instances in the same region, as long as the other instances are not traded by merchants of other factions. This is the reason that the wines in Angers are more expensive than the wines in the rest of France.
5) Trade rights. Having trade rights with the faction that holds the region on which you are trading will significantly increase the resource's value. Note that if you're trading something that's in your own region, then it counts as if you have trade rights.
Now, the above are common knowledge, although I've seen some people that are confused as to why the wines in Angers are more expensive etc.
The new thing I discovered is that your capital's trade buildings also significantly affect the income of all your merchants! This includes all buildings that have the "increase in tradeable goods" attribute (markets, shipwrights, wharfs, merchant guilds).
This can be easily tested by destroying such buildings in your capital. If you destroy something like a great market or a warehouse, the effect will be quite significant. Note that this only matters for your capital! Trade buildings in other settlements do not affect merchant trade at all.
So, it seems that:
-Having your capital at a central location is not always optimal. For example, in the crusades campaign Byzantium can make a ton of money with merchants by having constantinople as its capital, even though it is on the edge of the map. The docklands + merchant quarters combination increases merchant trade by a LOT. If you change the capital to a less developed settlement your merchant trade will decrease dramatically.
-Having a coastal capital actually benefits merchant trade because you have more trade-based buildings to build.
-Having a castle as a capital reduces merchant trade for the same reason!
-Having a master merchant's guild in your capital is better than having it in some other settlement.
-Markets might actually be worth building for your capital, even though farms seem to be better early on.
I noticed that in the Britannia campaign Scotland can make a lot of money by sending merchants to the silver resources of southern Ireland. I had a merchant with 10 finance that made 2000 florins per turn there, but as soon as I switched the capital from Perth to Stirling he made less than 1000 (Stirling is a landlocked castle). Note that this doesn't have much to do with the capital's distance, as Perth and Stirling are right next to each other. I tried destroying all trade buildings in Perth and then he made less than 1000 even with Perth as capital!
So, all in all, this was an interesting find that I wanted to share. It is kind of insignificant, but I actually like the fact that the capital city affects something other than corruption/public order/distance to resources. I like the idea of the capital acting as kind of a trade center and I also like the fact that the market buildings might actually have some use after all, even though their income boost is pretty low most of the time.