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The theory of contestable markets is used to derive predictions of the extent to which agricultural commodities behave as traded or nontraded goods. These predictions are confirmed with Zairian data which show that there is wide variation in the response of domestic commodity prices to real exchange rate changes.

This paper discusses Amazonian agricultural development with emphasis on the interrelations between regional conditions and the economic context represented by the national economy. The extreme abundance of land relative to complementary factors, together with the position of the region as a price taker in both factor and output markets, create the conditions for environmentally destructive expansion of cultivation at the extensive margin. It is argued that policies to promote a more ecologically sensitive pattern of development must take into account these links with the larger Brazilian economy and society as well as conditions within the region itself.