Institutions, Geography, and Market Power: The Political Economy of Rubber in the Brazilian Amazon, c. 1870–1910 1

Felipe Tamega Fernandes

Enterprise & Society, 2010, vol. 11, issue 4, 675-685

Abstract: The thesis applies a political economy approach to the study of how institutions and geography explain the development of a commodity chain. Focusing on the Brazilian Amazon from 1870 to 1910, the analysis develops a new theoretical framework constructed by combining standard trade models with institutions and economic geography. There are two levels of analysis: interactions among and within different nodes of the commodity chain. A quantitative-driven analysis from macroeconomic data supports inferences from microeconomic behavior. The thesis provides new information on rubber prices and exports, trader ledgers, estate accounts, newspapers, traveler accounts, and official documents. The research develops a demand- and supply-side analysis of the history of rubber, from tappers to manufacturers. It features the main rubber manufacturing countries, Britain and the U.S.A., and shows how competition prevailed along the chain, translating into a struggle for rubber supply. Rubber was not a homogeneous product. Due to a combination of quantity and quality, the Brazilian Amazon possessed significant market power, market power that shaped the rubber chain. In this light, the thesis investigates how the Brazilian rubber supply chain was organized and how agents profited from its monopolistic position. It also shows that taxation increased the regional welfare and allowed the government to support two related activities: telegraphs and shipping. The thesis proves that violence and coercion were not necessary features of rubber production, as argued by much of the literature. Through a game theoretic approach, the thesis demonstrates conditions under which production could have occurred without exploitation. In a context of high price inelasticity of demand and rising prices, production was driven by market forces. Inelasticity of demand was indeed one of the main features of the rubber boom. It shaped production, bargaining power between different nodes of the chain and competition within them, defining the distribution of profits along the rubber chain.

Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:entsoc:v:11:y:2010:i:04:p:675-685_00

Access Statistics for this article

More articles in Enterprise & Society from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().