Did Vasco da Gama Matter for European Markets? Testing Frederick Lane's Hypotheses Fifty Years Later
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 ‘pulled in’ 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’s 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’s 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’s impact on European markets.
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- 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.
- 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.
- Irwin, Douglas A, 1991.
"Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade,"
Journal of Political Economy,
University of Chicago Press, vol. 99(6), pages 1296-1314, December.
- 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.).
- Lane, Frederic C., 1968. "Pepper Prices Before Da Gama," The Journal of Economic History, Cambridge University Press, vol. 28(04), pages 590-597, December.
- Carol H. Shiue & Wolfgang Keller, 2007. "Markets in China and Europe on the Eve of the Industrial Revolution," American Economic Review, American Economic Association, vol. 97(4), pages 1189-1216, September.
- Carol H. Shiue & Wolfgang Keller, 2004. "Markets in China and Europe on the Eve of the Industrial Revolution," NBER Working Papers 10778, National Bureau of Economic Research, Inc.
- 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.
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