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Stretching the Inelastic Rubber: Taxation, Welfare and Lobbies in Amazonia, 1870-1910

  • Felipe Tâmega Fernandes

    ()

    (Harvard Business School, Entrepreneurial Management Unit)

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    This paper examines the effect of government intervention via taxation on domestic welfare. A case-study of Brazilian market power on rubber markets during the boom years of 1870-1910 shows that the government generated 1.3% of GDP through an export tax on rubber but that it could have generated 4.7% in total, had the government set the tariff at the optimal level. National, regional and local constraints prevented the government from maximizing regional welfare. In a context of lobbies, government budget maximization may have differed from regional welfare maximization.

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    File URL: http://www.hbs.edu/research/pdf/10-032.pdf
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    Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 10-032.

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    Length: 43 pages
    Date of creation: Oct 2009
    Date of revision:
    Handle: RePEc:hbs:wpaper:10-032
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