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The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon

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Author Info

  • Chimeli, Ariaster B.

    ()
    (Ohio University)

  • Soares, Rodrigo R.

    ()
    (Sao Paulo School of Economics)

Abstract

Agents operating in illegal markets cannot resort to the justice system to guarantee property rights, to enforce contracts, or to seek protection from competitors' improper behaviors. In these contexts, violence is used to enforce previous agreements and to fight for market share. This relationship plays a major role in the debate on the pernicious effects of the illegality of drug trade. This paper explores a singular episode of transition of a market from legal to illegal to provide a first piece of evidence on the causal effect of illegality on systemic violence. Brazil has historically been the main world producer of big leaf mahogany (a tropical wood). Starting in the 1990s, policies restricting extraction and trade of mahogany, culminating with prohibition, were implemented. First, we present evidence that large scale mahogany trade persisted after prohibition, through misclassification of mahogany exports as "other tropical timber species." Second, we document relative increases in violence after prohibition in areas with: (i) higher share of mahogany exports before prohibition; (ii) higher suspected illegal mahogany activity after prohibition; and (iii) natural occurrence of mahogany. We believe this is one of the first documented experiences of increase in violence following the transition of a market from legal to illegal.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5923.

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Length: 46 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5923

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Keywords: illegal markets; violence; homicide; mahogany; Brazil;

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  1. Adda, Jerome & McConnell, Brendon & Rasul, Imran, 2014. "Crime and the Depenalization of Cannabis Possession: Evidence from a Policing Experiment," CEPR Discussion Papers 9914, C.E.P.R. Discussion Papers.
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  9. Ariaster B. Chimeli & Roy G. Boyd, 2010. "Prohibition and the Supply of Brazilian Mahogany," Land Economics, University of Wisconsin Press, vol. 86(1), pages 191-208.
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  14. Alston, Lee J. & Libecap, Gary D. & Mueller, Bernardo, 2000. "Land Reform Policies, the Sources of Violent Conflict, and Implications for Deforestation in the Brazilian Amazon," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 162-188, March.
  15. Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.
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Cited by:
  1. Bryan, Mark L. & Del Bono, Emilia & Pudney, Stephen, 2013. "Drug-related crime," ISER Working Paper Series 2013-08, Institute for Social and Economic Research.

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