In: Economics
In some states, hunting licenses are allocated by lottery; if you want a license, you send in your name to enter the lottery. If the purpose of the system is to ensure that those who want to hunt the most get a chance to do so, what are the flaws of this system? How would the situation improve if people who won licenses were allowed to sell them to others?
In case of the lottery, the outcome is not controlled and it totally depends on the randomness and the population mix. For example, if in the lottery pool, then there is a greater probability that the number of individuals who are actually interested in hunting is more than the licenses will be provided in greater number to those who are serious hunters than the number of non-serious hunters and vice versa.
The main drawback of this system is its randomness and the dependency of the population mix. There can be chances that majority of licenses are given to those who are not so much keen on hunting and majority of people who are really looking to hunt remains unallocated of licenses due to this randomness.
This situation can be improved if the non-serious hunters are allowed to sell their licenses to the serious hunters as those individuals who are not inclined towards hunting can sell their license and the persons having interest in hunting can hunt by buying these licenses. However, this situation can even worsen the entire case as when the option is provided o sell out the license there can be a chance that more non-serious hunter applies for the lottery for earning the profit by selling the licenses.