SAMPLE ONE (Exploratory)
California Condors represent a degraded commons. California Condors have increased from a low of 22 birds in the wild in 1987 to approximately 268 in the wild today. This protected species is managed by the U.S. federal government.
Is our federal government managing this degraded commons to the best of our ability? Is a population growth of eight birds per year over the past 30 years satisfactory? Could we do better?
Schock Market might seek to answer these questions by launching three exploratory markets for California Condors. Different parameters for ownership, license, and oversight could be explored and debated.
The goal would be to achieve price discovery, stakeholder discovery, and innovative discovery for each of the three exploratory markets.
Imagine these are the markets:
Implement a South African model, allowing ranchers to own Condors nesting on their property.
2) Crowd Source:
Allow citizens to fund additional monies for federal Condor conservation efforts. Citizens that do so, receive a free Condor flight app for their phone.
Presently, all Condors are tagged. Create a license for each tag and sell that license, exclusively, to those with a gaming license. The license would be limited to corporations doing business in the same geographical region as Condors (i.e Nevada casinos).
Imagine this third market, “Casino,” eclipses all others from an economic perspective with participants, filing exploratory claims, suggesting a likely market value of $30 million. This means participants predict that a limited number of licenses, providing gaming rights related to Condors, would fetch at least $30 million from bidding casinos.
Imagine the market creator now closes all three markets.
These markets have fulfilled their role. The markets have allowed society to explore and vet three competing proposals for improving the population of California Condors. Trading data and suggested refinements have allowed each market to be improved while the markets were traded. The markets have revealed a financial value associated with each proposal.
And finally, each market has identified and flushed from the brush a nascent group of advocates, each seeking implementation of their desired proposal (see Sample Two below).
SAMPLE TWO (Qualified)
Imagine the U.S. Secretary of Interior takes an interest in the winning exploratory market, Casino. This Secretary asks Schock Market to complete the proposal by launching a qualified market.
Imagine the market is launched with 268 market claims corresponding to 268 Condors living in the wild.
Specifically, this qualified market might propose that the federal government provide Nevada casinos with an exclusive right to buy, sell, and create gaming around individual, tagged Condors. Breeding and protection would remain under federal authority. Federal authorities would attach tiny flight monitors to each bird and web cams in nests. Casinos would enjoy the opportunity to create eco-gaming around flight duration and altitude, nest location, first to carcass, mating and offspring, lifespan, and more.
Fledged chicks represent a windfall gain for the casino with rights to the parents. Condors lost to poaching or other causes, by contrast, represent a windfall loss to the casino. Funds from initial licensing and annual renewals support continued federal breeding and habitat programs. Native American tribes in the region might be guaranteed a number of licenses. Eighty percent of gaming profits go to the casinos, 20% is used to expand the existing federal recovery program.
The proposed market creates new stakeholders for California Condors. These stakeholders (casinos and tribes) have legal, financial, and security resources that can be put to work in defense of the species. Gamers worldwide may take note of and experience a new, vested interest in the future of this endangered species.
In this manner, the market creates a contest between the status quo and a new, dynamic alternative promising new revenues that may be used to promote Condor populations.
What is the outcome? The status quo might prevail. Perhaps casinos show tepid interest and bid far below the predicted value of $30 million. If so, society is served by this disappointment; we are better educated regarding the merits of the status quo and the shortcomings of proposed alternatives.
On the other hand, perhaps change triumphs. For example, imagine casinos bid the market up to $35 million at which point the Secretary of Interior asks that the market be brought to a close.
In the final phase, the winning casinos, native tribes, Schock Market, and federal authorities implement the now-complete market. Casinos and tribes take “ownership” of Condors in accordance with their claims. Those holding the most claims at time of market close, receive the most Condor licenses.
Winning casinos pay exploratory participants 2% of the $35 million ($700,000) for their efforts in spearheading the original exploratory market.
And with that, eco-gaming takes its first flight – on the Las Vegas Strip!
SAMPLE THREE (a snapshot of a market in motion)
Below is a snapshot of a claim market exploring a new commercial fishery. In this example, an imaginary state department, we call it the Jefferson Department of Fish and Wildlife (JDFW), might use a series of claim markets to assess the potential success (and/or pitfalls) of new fishing seasons, fishing grounds, participants, and more along its ocean coastline.
The outcome of these markets might provide JDFW with data on fisheries, pricing, suggested refinements, and such—information that is extremely expensive, or even impossible, to obtain through traditional policy analysis and public forum. This data, then, might allow JDFW to make more informed, more responsive, and more productive choices in their management of coastal fisheries than may presently be the case.
Table I above shows eight commercial fishermen (A – H) bidding for 5 available licenses in a new, proposed fishery or season. The market phase is qualified.
At SchockMarket.com, the columns in gray are not displayed for participants or the public. They are displayed here for educational purposes. The Claim History section displays which participants have held claims, and their time increments. The remaining two columns under Current Engagement Data, when combined, comprise the engagement value.
In this example, claimholder A has 1 claim at a bid price of $52,000. This participant has held this claim for 5 consecutive months without being benched or cancelling his or her claim. This participant has bid 20.23% of the total winning bids and held his or her claim for 26.32% of the total time on winning claims. This combination of bid price and time gives the claimholder an engagement value of 20.54% in relation to the other 4 claimholders. Claimholder A holds a claim that is relatively safe from challengers.
Claimholder G with a lower bid of $51,000 and only 1 month of accrued time and corresponding low engagement value of 19.12% is at risk of being benched by a challenger.
Note that claimholder B has bid the identical dollar amount as participant G ($51,000), but B is rewarded for having participated in the market earlier than participant G. How? B enjoys a higher engagement value than G (20.17% versus 19.12%).
The early participation of claimholder B provides market participants, the media, the general public, governing authorities, and others with preliminary results that may be digested and discussed and monitored over a period of months. Insights garnered from this data may be used to refine and improve the market prior to closing. Claimholder B is providing a public service by revealing his or her intentions early as compared to participant G. Claimholder G, by contrast, has withheld information from the public until the last month and in doing so has diminished his or her contribution to the advancement of knowledge related to the fisheries. The cost of his tardiness is a lower engagement value.
These claimholders seek to maintain and defend their claim up until the moment the market is closed by JDFW. If they hold winning claims at time of close, and if the claim market is chosen for implementation by JDFW, these claimholders enjoy an opportunity to exercise their new fishing rights and claims with real monies in the JDFW fishery.
Each claim market is a proposal. It is a form of free speech.
Many obstacles stand between this free speech and actual implementation of the market proposal. Some claim markets may be contrary to existing local, state, or federal laws, making implementation impossible without changes to applicable law. Schock Market makes no representation as to whether any particular claim market will result in a public/private partnership, tax savings, voter initiative or any changes or outcomes proposed by market creator or participants. Schock Market cannot guarantee that our market proposals will be implemented or that any payouts will be paid.
All participation is subject to the Market Rules, available here:www.schockmarket.com/marketrules.