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UIDB/04666/2020 UIDP/04666/2020 From the second half of the 17th century, the Tobacco trade became one of the main revenues for the European colonial empires. In Portugal there was a general contract, based on a system of contracts and exclusive businesses, with associated financial and tax benefits. How were the regulatory and surveillance mechanisms of this monopoly transposed to insular spaces? What kind of behavior did contractors have in island society? What is the role of the tobacco trade in the Azorean economy? These are some of the questions we will try to answer in this text. A partir da segunda metade do século XVII, o comércio do tabaco passou a ser uma das principais receitas dos impérios coloniais europeus. Em Portugal existia um contrato geral, baseado em regime de contratos e negócios exclusivos, com benefícios financeiros e fiscais associados. Como foram transpostos para os espaços insulares os mecanismos reguladores e de vigilância deste monopólio? Que tipo de comportamentos tinham os contratadores na sociedade insular? Qual o papel do comércio do Tabaco na economia açoriana? Estas são algumas das perguntas que tentaremos responder neste texto. publishersversion published

We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz [1995. Resistance to new technology and trade between areas. Federal Reserve Bank of Minneapolis Quarterly Review 19, 2–17] show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, finite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.

During the past decade, the average Chinese earns roughly 9 times less and is 10 times less productive than the average American at purchasing power parity. Current consensus attributes large differences in output per worker to differences in total factor productivity (TFP). Evidence suggests that most of the US-China TFP differences lie in the inefficiency of China's domestic-oriented service and agricultural sectors. This paper focuses on (1) the evidence of monopoly rights and its influence on work practice improvement at China's firms and plants and (2) the evidence that policy arrangement there has encouraged more competition in merchandise manufacturing and heavy industries while barriers to market access remain high against new firms in the domestic market (especially in services). A numerical experiment is provided, which suggests that China can enhance long-term income per capita by a factor of 10 largely through TFP gains by implementing reform to weaken protection of monopolies and encourage entry in all industries.

A key feature of recent work on barriers to technology adoption is the assumption that monopoly rights of insiders are limited by the ability of industry outsiders to enter. This paper endogenizes the decision of a government to provide barriers to technology adoption alone or in combination with barriers to entry of outsiders. Using a political economy model, we find that a government provides barriers to both technology adoption and outsider entry. If governments are not too "corrupt", restricting their ability to provide barriers to entry may eliminate barriers to adoption. However, for sufficiently "corrupt" governments, prohibiting barriers to entry leads to more extreme barriers to technology adoption.

We ask which part of the observed cross-country differences in the level of per capita income can be accounted for by monopoly rights in the labour market.We answer this question in a calibrated growth model with two final goods sectors.The novel feature being that monopoly rights in the capital-producing sector shield insiders from competition by outsiders and permit coalitions of insiders to choose inefficient technologies or working practices. We find that monopoly rights can lead to quantitatively much larger reductions in the level of per capita income than previously demonstrated.This comes about because they do not only reduce TFP in capital-producing sector but also increase the relative price of capital.This reduces the capital-labour ratio in the whole economy.The implied predictions about the price of capital goods relative to consumption goods and the investment share in output are quantitatively consistent with the cross-country facts.

We ask for which part of the observed cross‐country dierences in the level of per‐capita income monopoly rights can account. We answer this question in a calibrated growth model with capital. Monopoly rights in the capital‐producing sector shield labor market insiders from the competition by outsiders and permit coalitions of these insiders to choose inecient technologies or working practices. We find that monopoly rights can reduce the level of per‐capita income by quantitatively substantial amounts that are much larger than previously claimed. Moreover, the eects of monopoly rights on the price of capital goods relative to consumption goods and the investment share in output are quantitatively consistent with the Penn World Tables. The key to our findings is that monopoly rights in the capital‐producing sector do not only reduce total factor productivity there but also increase the relative price of capital. This reduces the capital‐labor ratio in the rest of the economy.

We study a two–sector version of the neoclassical growth model with coalitions of factor suppliers in the capital producing sectors. We show that if the coalitions have monopoly rights, then they block the adoption of the efficient technology. We also show that blocking leads to a decrease in the productivity of each capital producing sector and to an increase in the relative price of capital; as a result the capital stock and the production fall in each sector. We finally show that the implied fall in the level of per–capita income can be large quantitatively.