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Did Vasco da Gama Matter for European Markets? Testing Frederick Lane's Hypotheses Fifty Years Later

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  • Kevin H. O'Rourke
  • Jeffrey G. Williamson

Abstract

In his seminal publications between the 1930s and 1960s, Frederick Lane offered three hypotheses regarding the impact of the Voyages of Discovery that have guided debate ever since. First, pepper and other spice prices did not rise in European markets in the century before the 1490s, and thus could not have %u2018pulled in%u2019 the oceanic explorations by their rising scarcity. Second, Portuguese circumnavigation of Africa did not lower European spice prices across the 16th century, implying that the discovery of the Cape route had no permanent effect on Euro-Asian market integration. Third, 15th century Venetian spice markets were already well integrated with those in Iberia and northern Europe, implying that Portugal could not have had an intra-European market integrating influence in the 16th century. Lane developed these influential hypotheses by relying heavily on nominal spice prices from Venice and the Levant. This paper revisits Lane%u2019s hypotheses by using instead relative spice prices, that is, accounting for inflation. It also draws on evidence from Iberia and northern Europe. In addition, it explores European market integration before and after 1503, the year when da Gama returned from his financially successful second voyage. Lane%u2019s three hypotheses are rejected: the impact of the Portuguese was profound on all fronts. We conclude by using a simple model of monopoly and oligopoly to decompose the sources of the Cape route%u2019s impact on European markets.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11884.

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Date of creation: Dec 2005
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Handle: RePEc:nbr:nberwo:11884

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  1. Douglas A. Irwin, 1990. "Mercantilism as strategic trade policy: the Anglo-Dutch rivalry for the East India trade," International Finance Discussion Papers 392, Board of Governors of the Federal Reserve System (U.S.).
  2. Keller, Wolfgang & Shiue, Carol Hua, 2004. "Markets in China and Europe on the Eve of the Industrial Revolution," CEPR Discussion Papers 4420, C.E.P.R. Discussion Papers.
  3. O'Rourke, Kevin H. & Williamson, Jeffrey G., 2002. "After Columbus: Explaining Europe'S Overseas Trade Boom, 1500 1800," The Journal of Economic History, Cambridge University Press, vol. 62(02), pages 417-456, June.
  4. Lane, Frederic C., 1963. "Recent Studies on the Economic History of Venice," The Journal of Economic History, Cambridge University Press, vol. 23(03), pages 312-334, September.
  5. Lane, Frederic C., 1968. "Pepper Prices Before Da Gama," The Journal of Economic History, Cambridge University Press, vol. 28(04), pages 590-597, December.
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  1. O'Rourke K. and Williamson J. (2006) Did Vasco da Gama matter for European markets?
    by Ben in Economic History Blog on 2008-08-10 14:56:00

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