Monday, August 24, 2009

Punt Wars!

A long time ago, in a galaxy far far away....

No, I tell a lie, it was in Cambridge earlier this month. This weekend was due to visit friends in Cambridge and go punting but alas was unable to make it. Luckily Griff Rhys Jones was punting his way down the backs (above) for the last of his TV programs about Rivers.

But maybe it's just as well didn't visit Cambridge this time, as it turns out the idylic looking drift through the centre of that city is less plain song and more like The Sopranos.

The competition between punt operators has reached epic levels, with fights between touts, knives used, hips broken, punts cut loose and now even cut in two lengthwise by an electric saw!

The problem is that the river ain't big enough for all of them, what economists call "the tragedy of the commons".

Basically that theory says that if something is of value and free everyone will try and get some and the net result is over exploitation and no one gets anything. There is a lot of money to be made selling punt trips down the Cam, but its turning it into a traffic jam.

There is a documentary film being made of this story, and the trailer ends with lots of talk of regulation required - but what form should it take?

Clearly numbers of punts on the Cam must be limited, but how are the lucky ones with permits going to get them - should it be beauty contests, first come first serve or a yearly auction?

Well I know what the economists would say - auction the rights and then the council gets a bit of lovely money and the punting rights go to the organisation that can utilise the resource the most efficiently.

Already those with auction theory experience will possibly be muttering about simultaneous multi round ascending auctions or combinatory clock auctions with second stage assignment of landing rights and maximum holdings to ensure competition - no doubt earning their company huge consultancy fees.

But lets not stop there - consider the needs of a business to plan ahead. A single year's licence isn't that useful, as there's be a risk that the price of a punt slot would increase the following year to a level not covered by the business plan. And what happens if a company goes bust.

Yes thats right - what we'll have to do is create a market to trade punt rights, and to protect against future price rises a futures market.

So there you go, the solution to the Cam wars: punt futures.

You read it here first!

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