SA ‘still in the dark’ over rhino horn trade

this conditions the capacity of firms to launch or withstand price wars… What are the transaction costs – transportation, storage, smuggling, bribing, protection?

“Without this information, it is very adventurous to say it (legalising the trade) will bring the price down.”

The price structure depended on the market structure. What were the channels of competition, how would poachers compete with the legal traders, what were the barriers to entry into the trade? None of this was known, nor was the size of the rhino horn demand, or the evolution of demand.

“Cultural habits are not synonymous with an eternal stable demand. Can we say for sure this will bring the price down? How? If you say prices will go down, I say: ‘What will that do to demand?’ Economics textbooks on page 2 say if the price goes down, the demand expands.”

Although the trade was illegal, this was not a barrier to studying the trade, in the same way that the illegal drug trade had been studied in the US. Nor was there a need for economics researchers to go undercover to do so. Illegal markets were closely related to legal markets and much information could be gathered through a variety of channels.

The reality was that no one had “even an approximation of an idea of how this market works”.

“We were all behind a veil of ignorance,” Nadal said.

Without a rigorous and accurate assessment of the illegal rhino horn trade, those who claimed that opening the trade would result in the criminal cartels being outcompeted, was simply deluding themselves.

“One possible outcome is that it will lock us in on a path to a runaway expanding market.”