Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India
AbstractTrade and export, it is argued, spur economic growth. This paper studies the microeconomics of exporting. We build a heuristic model of transactions between exporters and producers and relate it to East India Company (EIC) operations in colonial Bengal. Our model and the historical record stress two difficulties: the exporter and its agents might not uphold payment agreements, and producers might not honor sales contracts. The model shows when procurement succeeds or fails, highlighting the tension between these two hold-up problems. We analyze several cases, including the EIC's cotton textile venture, the famous Opium Monopoly, and present-day contract farming.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 98 (2008)
Issue (Month): 3 (June)
Other versions of this item:
- Anand V. Swamy & Rachel E. Kranton, 2006. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," Department of Economics Working Papers 2006-05, Department of Economics, Williams College.
- Anand V. Swamy & Rachel E. Kranton, 2006. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," Center for Development Economics 2006-01, Department of Economics, Williams College.
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
- N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East
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