The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon
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.
|Date of creation:||Aug 2011|
|Date of revision:|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Soares, Rodrigo R., 2004. "Development, crime and punishment: accounting for the international differences in crime rates," Journal of Development Economics, Elsevier, vol. 73(1), pages 155-184, February.
- John J. Donohue III & Benjamin Ewing & David Peloquin, 2011.
"Rethinking America's Illegal Drug Policy,"
NBER Working Papers
16776, National Bureau of Economic Research, Inc.
- Fisman, Raymond & Wei, Shang-Jin, 2001.
"Tax Rates and Tax Evasion: Evidence from 'Missing Imports' in China,"
CEPR Discussion Papers
3089, C.E.P.R. Discussion Papers.
- Raymond Fisman & Shang-Jin Wei, 2004. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 471-500, April.
- Raymond Fisman & Shang-Jin Wei, 2001. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," NBER Working Papers 8551, National Bureau of Economic Research, Inc.
- Emily Greene Owens, 2011. "Are Underground Markets Really More Violent? Evidence from Early 20th Century America," American Law and Economics Review, Oxford University Press, vol. 13(1), pages 1-44.
- Medina, Carlos & Martínez, Hermes, 2003. "Violence and Drug Prohibition in Colombia," MPRA Paper 6935, University Library of Munich, Germany.
- Erwin H. Bulte & G. Cornelis van Kooten, 1999. "Economics of Antipoaching Enforcement and the Ivory Trade Ban," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 453-466.
- Jérôme Adda & Brendon McConnell & Imran Rasul, 2014.
"Crime and the Depenalization of Cannabis Possession: Evidence from a Policing Experiment,"
Journal of Political Economy,
University of Chicago Press, vol. 122(5), pages 1130 - 1202.
- Adda, Jérôme & McConnell, Brendon & Rasul, Imran, 2014. "Crime and the Depenalization of Cannabis Possession: Evidence from a Policing Experiment," IZA Discussion Papers 8013, Institute for the Study of Labor (IZA).
- Adda, Jérôme & 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.
- Jushan Bai & Pierre Perron, 1998.
"Estimating and Testing Linear Models with Multiple Structural Changes,"
Econometric Society, vol. 66(1), pages 47-78, January.
- Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche 9552, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche 9552, Universite de Montreal, Departement de sciences economiques.
- Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.
- 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.
- Miron, Jeffrey A, 2001. "Violence, Guns, and Drugs: A Cross-Country Analysis," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 615-33, October.
- Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2006. "The Market for Illegal Goods: The Case of Drugs," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 38-60, February.
- Donohue, John J, III & Levitt, Steven D, 1998. "Guns, Violence, and the Efficiency of Illegal Markets," American Economic Review, American Economic Association, vol. 88(2), pages 463-67, May.
- Jeffrey A. Miron & Jeffrey Zwiebel, 1995. "The Economic Case against Drug Prohibition," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 175-192, Fall.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5923. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.