Abstract
Using a rich dataset of territories and cities of the Holy Roman Empire in the 16th century, this paper investigates the determinants of adoption and diffusion of Protestantism as a state religion. A territory's distance to Wittenberg, the city where Martin Luther taught, is a major determinant of adoption. This finding can be explained through a theory of strategic neighborhood interactions: in an uncertain legal context, introducing the Reformation was a risky enterprise for territorial lords, and had higher prospects of success if powerful neighboring states committed to the new faith first. The model is tested in a panel dataset featuring the dates of introduction of the Reformation.