This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
11/30/2010
Utah DWR License Pricing Structure
The pricing for hunting and fishing licenses in Utah encorporates several forms of bundling. The most obvious form of bundlng is the fishing or small game hunting license. The one permit lets you hunt or fish for a variety of species. Another form of bundling is the small game/fishing combination license. When purchased seperately, the total cost for the two permits would be $52.oo. However, the combination permit is only $30.oo. This seems like an amazing savings, but the DWR probably makes much more money overall because the price is low enough to get people that may never fish, or may never hunt to buy the other license just in case. The last form of bundling I want to discuss is that they don't allow you to buy a big game permit without purchasing the small game permit. This is kind of a form of mixed bundling. It's interesting to see how this occurs in government agencies as well as in the private sector.
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8 comments:
I think this is an example of bundling, but not of good bundling - perhaps there's a job for an SUU graduate to help the state raise more funds!
The key to using bundling to increase producer surplus is to bundle things together that people may not want, while including at least one thing that different people want.
So, in this case, it's hard for me to see how the $52 bundle attracts some people who really want it for the fishing, and some who really want it for the hunting.
Having said all that, sometimes a seller just wants to bundle because it makes it easier for them. Perhaps people in the DWR just don't want to have to do 2 licenses.
If the DWR is using this bundling method in an effort to make it easier for them, they are going about it all wrong. They offer so many licenses that it can get somewhat confusing for someone not familiar with the program. It is likely that they use the current system for familiarity reasons rather than efficiencies.
Related to the DWR's pricing structure; it is particularly interesting how the DWR has managed revenue from deer tags in relation to supply of deer over the course of the past 10 years in Northern Utah. For example, the DWR has offered and issued far more deer tags than should have been allotted each year given the supply of deer in that region. Of course they have earned significant revenue over these past 10 years from issuing so many tags. However, they have allowed for the supply of deer to decrease exponentially do to over-harvesting, coupled with winter kill. Because of this, last year they shortened the deer season by approximately two weeks and lowered the amount of tags issued in the Northern Region. They did not manage this pricing structure properly, consequently, they will have a decreasing revenue stream, this causing them to inflate prices. These magnified prices lead sportsmen to exercise their next best alternative opportunity cost, purchasing a tag in another region, or in this case, another state.
Interesting Lando. Are you speaking from personal experience, or do you have a link for us?
The DWR is a money hungry agency in my opinion. The more money they can sqeeze from sportsmen, the more they can pay themselves. I agree with Lando for the most part. However, I feel that a lot of sporstmen will respond by not buying a tag. In my opionion and that of a lot of people I know. Spending 40-45 dollars on a deer tag for a poor 3 day hunt is not worth it. The buyers surplus is gone. The DWR is losing a lot of hunters. However, I do applaud the changes made last fall by the DWR. They are making an effort to ensure the future of deer hunting in Utah. They are decreasing the number of tags, increasing the number of units and the length of the hunt. They admit that the price of a tag will have to go up as a result of fewer tags. In my opinion, if their plan increases the quality of deer hunting, hunters would be willing to pay the extra 5-10 dollars. The changes can be found here: http://wildlife.utah.gov/dwr/news/42-utah-wildlife-news/412-smaller-deer-hunting-areas-for-2012.html
-1 for Belba for having a poorly formatted link.
I'm not sure we should be surprised by robotic deer. What's interesting is that people shoot at them. What does that say about what hunters get utility out of: the shooting part is more important for some than the figuring out if the target is actually a real deer.
…Or maybe the DWR is using their extra money to buy robotic deer. Yes, that is right, robotic deer. When I read the article I couldn’t help but to laugh. State officials are now using robotic deer to catch poachers. Poachers who are caught are cited on the spot and their weapons are seized. The DWR is running this program in hopes to increase the supply of deer, and of course scare away poachers.
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