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When the Law Does Not Matter: The Rise and Decline of the Mexican Oil Industry

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  • Haber, Stephen
  • Maurer, Noel
  • Razo, Armando

Abstract

Changes in formal institutions do not always affect economic outcomes. When an industry has specific technological features that limit a government's ability to expropriate it, or when the industry is able to call on foreign governments to enforce its de facto property rights, economic agents can easily mitigate changes in formal institutions designed to reduce these property rights. We explore the Mexican oil industry from 1911 to 1929 and demonstrate that informal rather than formal institutions were key, permitting oil companies to coordinate their responses to increases in taxes or the redefinition of their de jure property rights.

Suggested Citation

  • Haber, Stephen & Maurer, Noel & Razo, Armando, 2003. "When the Law Does Not Matter: The Rise and Decline of the Mexican Oil Industry," The Journal of Economic History, Cambridge University Press, vol. 63(1), pages 1-32, March.
    • Handle: RePEc:cup:jechis:v:63:y:2003:i:01:p:1-32_00
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    Cited by:

    1. Lakshmi Iyer & Noel Maurer, 2008. "The Cost of Property Rights: Establishing Institutions on the Philippine Frontier Under American Rule, 1898-1918," Harvard Business School Working Papers 09-023, Harvard Business School, revised Apr 2009.
    2. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4525-4595, Elsevier.
    3. Luis FELIPE Zegarra, 2016. "Political instability and non-price loan terms in Lima, Peru: evidence from notarized contracts," European Review of Economic History, European Historical Economics Society, vol. 20(4), pages 478-525.
    4. Carlos Riojas & Alfonso Alarcon, 2004. "Regionalizacion y cambio institucional en Mexico a finales del siglo XX," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 1(1), pages 93-115, Julio-Dic.
    5. Kevin K. Tsui, 2011. "More Oil, Less Democracy: Evidence from Worldwide Crude Oil Discoveries," Economic Journal, Royal Economic Society, vol. 121(551), pages 89-115, March.
    6. M. del Mar Rubio Varas, 2005. "The role of Mexico in the first oil shortage: 1918-1922, an international perspective," Economics Working Papers 888, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Marcelo Bucheli & Ruth V. Aguilera, 2010. "Political Survival, Energy Policies, and Multinational Corporations," Management International Review, Springer, vol. 50(3), pages 347-378, June.
    8. Osmel Manzano & Francisco Monaldi, 2008. "The Political Economy of Oil Production in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2008), pages 59-103, August.
    9. Noguera-Santaella, José, 2016. "Geopolitics and the oil price," Economic Modelling, Elsevier, vol. 52(PB), pages 301-309.

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