Prohibition and the Supply of Brazilian Mahogany

Abstract

We use a unique data set to investigate the economic consequences of banning the harvest and trade of Brazilian mahogany. Because we find strong evidence that mahogany is smuggled out of Brazil as “other tropical species” through formal export mechanisms, we are able to construct a time series of quantities and implicit export prices covering both the periods before and after prohibition. Our finding suggests that a trade ban increases supply and makes the illegal good more affordable. Our analysis can offer important insights into other illegal markets, such as those for narcotics and products manufactured from endangered animal species. (JEL Q21, Q56)