Stretching the Inelastic Rubber: Taxation, Welfare and Lobbies in Amazonia, 1870-1910
43 Pages Posted: 28 Oct 2009
Date Written: October 27, 2009
Abstract
This paper examines the effect of government intervention via taxation on domestic welfare. A case-study of Brazilian market power on rubber markets during the boom years of 1870-1910 shows that the government generated 1.3% of GDP through an export tax on rubber but that it could have generated 4.7% in total, had the government set the tariff at the optimal level. National, regional and local constraints prevented the government from maximizing regional welfare. In a context of lobbies, government budget maximization may have differed from regional welfare maximization.
Keywords: Rubber, Commodities, Market Power, Optimal Tariff, Welfare, Trade and Brazil
JEL Classification: F14, H21, L13, L73, N76
Suggested Citation: Suggested Citation
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