High barriers to entry - namely, the need for connections and resources to smuggle an illegal commodity without getting caught - mean that rhino horn traders don’t operate in an open market with perfect competition. While rhino horn is an internationally traded commodity, it isn’t just an ordinary trade good.
About 5,000 members of the Critically Endangered species remain - still perilously low, but almost twice as many as were alive in the 1990s, after poaching and habitat loss drove the species to the brink of extinction.
He wanted to see what the available data suggested about the relationship between suppliers in India and South Africa to develop a model to explore the impact of factors such as the rule of law and corruption and to see if he could find a model that would predict the black-market price for rhino horn. Looking at the trends in the data, he set out the objectives of his study. Since the illicit trade of rhino horn is, essentially, an international commodity business, Lopes had a hunch that analytical tools used by economists could help shed light on what was happening. Similarly, a fall in India would correspond to a fall in South Africa,” he told Mongabay. “I noticed that when the number of poaching cases rose in South Africa, a similar spike could be seen in India. Lopes’s curiosity grew when he compared the graphs of poaching cases in the two range countries. (Nepal also maintains detailed records, but poaching numbers there are too low to provide much data.) Of all the rhino range countries, only India and South Africa make available detailed, long-term and up-to-date records of poaching cases, he says. Having previously researched the rise of poaching in India’s Kaziranga National Park, he had an idea about where to start looking for answers. “But it did not talk about the link between the source countries.” Lopes decided to examine the issue in a paper recently published in the Australian Journal of Agriculture and Resource Economics. “The report briefly mentioned South Africa, Asia and India as the main source countries for rhino horns, which made their way to China and Vietnam,” says Lopes, an assistant professor at the American University in Sharjah, United Arab Emirates. The economic researcher in him thought there was another piece of the puzzle to explore. The report, which described rhino poaching and counter-poaching measures, talked about the link between the countries where rhinos are found and countries where rhino horns were in great demand for their purported medicinal properties. When economist Adrian Lopes read a recent report by the World Wildlife Fund (WWF), a question popped into his mind. Lopes’s research also indicates that stricter conservation laws can reduce the number of rhinos being killed, but that corruption and institutional instability can erode those gains.His findings suggest a market model in which suppliers in the two countries collude rather than compete, setting a quantity and price that maximizes profits all around.