Contracts, hold-up, and exports: Textiles and opium in colonial India
Abstract
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 (EIC) operations in colonial Bengal. Our model
and the historical record stress two difficulties: The exporter and its agents might
not uphold payment 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 EIC's cotton textile
venture, the famous Opium Monopoly, and present-day contract farming.
Type
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https://hdl.handle.net/10161/1736Published Version (Please cite this version)
10.1257/aer.98.3.967Publication Info
(2008). Contracts, hold-up, and exports: Textiles and opium in colonial India. American Economic Review, 98(3). pp. 967-989. 10.1257/aer.98.3.967. Retrieved from https://hdl.handle.net/10161/1736.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Rachel Kranton
James B. Duke Distinguished Professor of Economics
Rachel Kranton studies how institutions and the social setting affect economic outcomes.
She develops theories of networks and has introduced identity into economic thinking.
Her research contributes to many fields including microeconomics, economic development,
and industrial organization.
In Identity Economics, Rachel Kranton and collaborator George Akerlof, introduce a
general framework to study social norms and identity in economics.
In the economics of networks, Rachel Kranton develop
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