Donkey business: trade, resource exploitation, crime and violence in a contestable market

The growing demand for ejiao, a traditional Chinese medicine product derived from donkey hides, has sparked a global trade that profoundly impacts donkey populations and local economies in low and middle-income countries. In response to the pressing issue of burgeoning populations of stray and abandoned donkeys, Brazil implemented regulatory measures governing the export of these animals to China in 2017. This paper examines the intricate relationship between regulation of a natural resource-based contestable market -- in which property rights are not well-defined -- and local crime rates, focusing on the donkey hide trade in Brazil. Employing a quasi-experimental research design, we leverage the timing of the regulatory measures alongside variations in donkey occurrences per inhabitant across Brazilian municipalities to provide compelling evidence that the surge in ejiao demand has led to an increase in crime and violence within Brazil. These findings underscore the critical importance of nuanced market regulation to mitigate potential social costs in markets lacking well-defined property rights. Furthermore, they highlight the urgent need for robust monitoring and enforcement frameworks to address pressing issues such as the predatory exploitation of donkey populations on a global scale.