Markets in everything, unexpected loopholes edition

by on October 21, 2010 at 12:26 pm in Economics, Games, Law | Permalink

"Crafted from 40,000-year old Woolly Mammoth Ivory, they capture the exquisite design and proportions of the original Staunton pattern Chess set, registered by Nathaniel Cook and produced by Jacques of London in 1849"

For more than 2,000 years, Mammoth Ivory has been traded and it remains a highly prized commodity across the world. While that demand for the Mammoth Ivory has always been higher than its supply, it skyrocketed in 1963 when the CITES agreement was enacted. This agreement banned all sales of new Elephant or Walrus Ivory, in an effort to protect the animals from extinction. As a result, Mammoth Ivory became the only type of animal-based ivory that is exempt from the international trade restrictions because it is considered to be a fossil.

The price is $9.995.00.  If that's not offbeat enough for you, try "Endangered Parrots of the World Chess Set," for $4,790.00, although I suspect they would come down if you bought them in quantity.

MW October 21, 2010 at 9:19 am

How clever. Most people would think the price would go up with quantity as there is a limited supply of endangered parrots. But you anticipate that demand would create a market and good husbandry skills would emerge so as to keep the parrots from becoming endangered.

todd October 21, 2010 at 9:34 am

Cockatoo takes Macaw en passant. Polly want a checkmate?

This reminds me of the best line in the history of "The Simpsons":

'Mr. Simspson, I'm not going to lie to you. I need a large African elephant, and I need it today.'

cook inlet fisherman October 21, 2010 at 11:25 am

Mastodon Ivory is pretty common around Anchorage.

It's quite easy to find good bargains when the indigenous peoples are in town for a couple of days selling crafts.

mulp October 22, 2010 at 3:15 pm

I am confused by the implied causality.

The 1963 CITES treaty increased the demand in the 19th century for the ice age Mammoth Ivory used in the 19th century to make art objects?

Is the implication that the failure to drive current ivory sources to extinction has driven up the prices of ice age ivory because modern ivory is not a finite supply?

CITES prohibits the sale of ivory, among other things, sourced from the endangered stocks of wild life, which includes plants – most species with CITES listing status are plants.

CITES does not prohibit sale of ivory, or anything else, that is sourced from non-wild life sources.

Is the implication of the quote that CITES has prevented the price of 21th century ivory from reaching the high prices of 19th century ivory objects made from extinct species ivory?

If ivory from elephants were to fetch a higher price than that of ice age ivory, a free market capitalist would certainly have acquired the breeding stock to breed elephants to produce ivory that meets CITES class II restrictions allowing regulated sale.

My guess is those who desire 21st century ivory want the free lunch of pillage and plunder without the cost of sustainable harvest. In other words, the market price curve for supply is at all points far below the price curve for sustainable supply.

What economists seem to forget once they finish econ 101 is the supply curve never hits a price of $0, and is always always always limited at the lower bound by cost. Cost and price are not the same – price is always higher than the cost of sale. For a sustainable business, the price is always higher than the cost of all the factors of production.

CITES is merely a market rule that requires the price reflect the total cost of all factors of sustainable production.

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