In an attempt to reduce poaching of elephant ivory tusks, officials in Kenya burned illegally gathered tusks. Using your understanding of shifts in supply and demand, will this turn out to be helpful or hurtful move on the Kenyan goverment's part?
1 Answer | Add Yours
Supply and demand analysis tells us that the actions of the Kenyan government will be counterproductive. They will simply give poachers more incentive to go and kill more elephants.
When the Kenyan government burns the poached elephant tusks, the immediate impact in economic terms is that the supply of ivory goes down. This is represented by a shift of the supply curve to the left. When this happens (assuming demand does not change) the price of ivory will jump. What ivory is still remaining will be much more valuable. What this will do is to send a signal to potential poachers. They will see that the price of ivory is very high. Therefore, they will want to supply more ivory. If they have the incentive to supply more ivory, then it is likely that they will go out and kill more elephants illegally.
Thus, by destroying the ivory, the Kenyan government will make it more likely that further killing of elephants will occur. What the government should probably do is to sell the confiscated ivory at a reasonable price so as to drive down the demand for poached ivory.
We’ve answered 318,051 questions. We can answer yours, too.Ask a question