 Banking on extinction: endangered species and speculationCharles Mason, Erwin Bulte and Richard Horan Oxford Review of Economic Policy, 2012, vol. 28, issue 1, 180-192 Abstract: Many wildlife commodities, such as tiger bones, bear bladders, ivory, and rhino horn, have been stockpiled in large quantities by speculators who expect that future price increases justify forgoing the interest income associated with current sales. When supply from private stores competes with supply from ‘wild populations’ (in nature) and when speculators are able to collude, it may be optimal to coordinate on an extinction strategy. We analyse the behaviour of a speculator who has access to a large initial store, and finds that it is optimal to deter poachers’ entry either by depressing prices (carefully timing own supply) or by depressing wild stocks. Which strategy maximizes profits critically depends on the initial wildlife stock and initial speculative stores. We apply the model to the case of black rhino conservation, and conclude it is likely that ‘banking on extinction’ is profitable if current speculators are able to collude. Contrary to conventional wisdom, we also find that extinction is favoured by such factors as low discount rates or high growth rates. Copyright 2012, Oxford University Press. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:28:y:2012:i:1:p:180-192 Access Statistics for this article Oxford Review of Economic Policy is currently edited by Christopher Adam More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.