Shipwrecked by Rents

51 Pages Posted: 4 Nov 2020

See all articles by Fernando Arteaga

Fernando Arteaga

University of Pennsylvania, School of Arts & Sciences, Department of Economics, Students

Desiree Desierto

Economics Department

Mark Koyama

George Mason University - Department of Economics; George Mason University - Mercatus Center

Multiple version iconThere are 2 versions of this paper

Date Written: September 15, 2020

Abstract

The trade route between Manila and Mexico was a monopoly of the Spanish Crown for more than 250 years. The Manila Galleons were “the richest ships in all the oceans”, but much of the wealth sank at sea and remain undiscovered. We introduce a newly constructed data set of all of the ships that traveled this route. We show formally how monopoly rents that allowed widespread bribe-taking would have led to overloading and late ship departure, thereby increasing the probability of shipwreck. Empirically, we demonstrate not only that these late and overloaded ships were more likely to experience shipwrecks or to return to port, but that such effect is stronger for galleons carrying more valuable, higher-rent, cargo. This sheds new light on the costs of rent-seeking in European colonial empires.

Suggested Citation

Arteaga, Fernando and Desierto, Desiree and Koyama, Mark, Shipwrecked by Rents (September 15, 2020). Available at SSRN: https://ssrn.com/abstract=3693463 or http://dx.doi.org/10.2139/ssrn.3693463

Fernando Arteaga

University of Pennsylvania, School of Arts & Sciences, Department of Economics, Students ( email )

160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://https://economics.sas.upenn.edu/people/fernando-arteaga

Desiree Desierto

Economics Department ( email )

4400 University Drive
Fairfax, VA 22030
United States

Mark Koyama (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://mason.gmu.edu/~mkoyama2/About.html

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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