Shipwrecked by Rents

92 Pages Posted: 4 Nov 2020 Last revised: 11 Dec 2023

See all articles by Fernando Arteaga

Fernando Arteaga

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

Desiree Desierto

George Mason University - Department of Economics

Mark Koyama

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

Multiple version iconThere are 3 versions of this paper

Date Written: November 29, 2023

Abstract

The trade route between Manila and Mexico was a monopoly of the Spanish Crown for more than 250 years. The ships that sailed this route --- the Manila Galleons, were ``the richest ships in all the oceans'', but much of the wealth sank at sea and remains undiscovered. We introduce a newly constructed dataset of all of the ships that travelled this route, and construct a model showing how monopoly rents that allowed widespread bribery would have led to inefficient cargo loading and delayed ship departure, which increased the probability of shipwreck beyond normal levels. Empirically, we demonstrate not only that ships that sailed late were more likely to shipwreck, but also that the effect is stronger for galleons carrying more valuable, higher-rent, cargo. This sheds new light on the relationship between, and social costs from, monopoly rents and corruption.

Suggested Citation

Arteaga, Fernando and Desierto, Desiree and Koyama, Mark, Shipwrecked by Rents (November 29, 2023). Journal of Development Economics, Forthcoming, 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

George Mason University - Department of Economics ( 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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