Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India
Trade and export, it is argued, spur economic growth. This paper studies the microeconomics of exporting. We build a heuristic model of transactions between exporters and producers and relate it to East India Company operations in colonial Bengal. Our model and the historical record stress two difficulties: the exporter and its agents might not uphold pricing agreements, and producers might not honor sales contracts. The model shows when procurement succeeds or fails, highlighting the tension between these two hold-up problems. We analyze several cases including the East India Company's textile venture, the famous Opium Monopoly, and present-day contract farming.
|Date of creation:||Dec 2006|
|Publication status:||published in American Economic Review, June 2008, v. 98, iss. 3, pp. 967-89.|
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Other versions of this item:
- Rachel Kranton & Anand V. Swamy, 2008. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," American Economic Review, American Economic Association, vol. 98(3), pages 967-989, June.
- Anand V. Swamy & Rachel E. Kranton, 2006. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," Department of Economics Working Papers 2006-05, Department of Economics, Williams College.
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
- O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
- N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East
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- Lorenzo Casaburi & Rocco Macchiavello, 2015. "Loyalty, Exit, and Enforcement: Evidence from a Kenya Dairy Cooperative," American Economic Review, American Economic Association, vol. 105(5), pages 286-290, May.
- Alexander M. Danzer & Robert Grundke, 2016. "Coerced Labor in the Cotton Sector: How Global Commodity Prices (Don't) Transmit to the Poor," CESifo Working Paper Series 5937, CESifo Group Munich.
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