The Economics of Synthetic Rhino Horns
32 Pages Posted: 24 Aug 2016 Last revised: 10 Aug 2017
Date Written: June 1, 2017
To examine the potential impact of synthetic horns to reduce rhino poaching, a formal model of the rhino horn market in which there exist firms with the capability to produce high quality synthetic horns is presented and studied. The analysis shows that whether the availability of synthetic horns would decrease the equilibrium supply of wild horns -- and how much the reduction would be -- depends on market structure -- i.e., how competitive the synthetic horn production sector is -- and on how substitutable the synthetic horns are for wild horns. The implications of these results for conservation policies are derived and discussed. Synthetic horn producers would benefit more by promoting their products as being superior to wild horns, but this could increase horn prices and lead to more rhino poaching. For conservation purposes, it may be beneficial to incentivize firms to produce inferior fakes -- synthetic horns that are engineered to be undesirable in some respect but difficult for buyers to distinguish from wild horns. The analysis also shows that promoting competition in the production of synthetic horns in general is desirable from a conservation standpoint as synthetic horn producers may prefer to keep prices at a high enough level that could still encourage significant amount of poaching.
Keywords: conservation, rhinos, rhino horns, poaching, synthetic horns, fake horns, adverse selection
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