Citation:

Carlos Alejandro Ponzio. "Corruption and Market Power in New Spain’s Tobacco Monopoly: Data and Micro-historical Experimentation" International Research Journal of Economics and Management Studies, Vol. 4, No. 2, pp. 138-146, 2025.

Abstract:

This paper studies corruption as a form of response to colonial rule in New Spain. In late colonial Mexico, the Crowin established a Tobacco Monopoly. The relationship between the market power of the monopoly and the acts of corruption documented by Dean Smith (2014) is studied. I estimate a decline in market power and a probable worsening of public finances because of corruption. In addition to presenting factual evidence, an experiment is carried out with 21st-century subjects who were handed over to situations like the ones lived by 18th-century planters to elicit the corrupt behavior of the time. Inspired by historical facts, this experiment is defined as a Micro-historical experiment. I found out that an agent tends to behave corruptly when any of three economic variables are present: (1) Harmful regulation to the agent, (2) Economic inequality and (3) Contingency of the decision to act corruptly when other agents are corrupt.

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Keywords:

Contingent Behavior, Inequality and Corruption, Lerner Index, Micro-Historical Experiment.