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The use of violence ini llegal markets: evidence from mahogany trade in the Brazilian Amazon


  • Ariaster B. Chimeli

    (Ohio University)

  • Rodrigo R. Soares

    () (Department of Economics PUC-Rio)


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.

Suggested Citation

  • Ariaster B. Chimeli & Rodrigo R. Soares, 2011. "The use of violence ini llegal markets: evidence from mahogany trade in the Brazilian Amazon," Textos para discussão 592, Department of Economics PUC-Rio (Brazil).
  • Handle: RePEc:rio:texdis:592

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    References listed on IDEAS

    1. 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.
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    7. Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.
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    10. Medina, Carlos & Martínez, Hermes, 2003. "Violence and Drug Prohibition in Colombia," MPRA Paper 6935, University Library of Munich, Germany.
    11. 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.
    12. 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.
    13. 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.
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    Cited by:

    1. Bryan, Mark L. & Del Bono, Emilia & Pudney, Stephen, 2013. "Drug-related crime," ISER Working Paper Series 2013-08, Institute for Social and Economic Research.
    2. Dix-Carneiro, Rafael & Soares, Rodrigo R. & Ulyssea, Gabriel, 2016. "Local Labor Market Conditions and Crime: Evidence from the Brazilian Trade Liberalization," IZA Discussion Papers 9638, Institute for the Study of Labor (IZA).

    More about this item


    illegal markets; violence; homicide; mahogany; Brazil Jel Codes: K42; O13; O17; Q58;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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