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Horsemeat Lovers Breed Galloping Increases in Thefts
Subject Comparative statics
Topic Equilibrium
Key Words Thefts, price, sales, disease, export
News Story

Horse stealing is on the rise, although the number of thefts is still small. For example, in Texas, where the horse industry is second to the cattle industry, about 200 out of the one million horses on ranches are stolen in any given year. The stolen horses are generally trucked to slaughterhouses and, after processing, find their way to restaurants in Europe, often before the loss is reported.

The reason for the increase in horse stealing appears to be the rising price of horsemeat. For the last decade, horsemeat has traded for 45 to 50 cents a pound; now it is around 80 cents a pound. Experts say that horsemeat is becoming increasingly popular in Europe because of mad cow disease and foot-and-mouth disease which have reduced sales of beef, lamb, and pork, both in the countries where the diseases are most prevalent - Great Britain and France - and the countries to which the meats would have been exported.

Special Texas Rangers are fighting back, using hi-tech aids such as computer chips embedded under the horses' skin to trace the location of stolen horses. Digital photos are also being used to identify stolen horses.

(Updated June 1, 2001)

Questions
1.

Draw a supply and demand diagram of the market for beef. Show the initial equilibrium price and quantity. What has happened to the curves and the equilibrium as a result of the scare over mad cow disease and foot-and-mouth disease? Explain and illustrate.

2. Now draw a supply and demand diagram of the market for horsemeat, showing the initial equilibrium.
a) Given your answer to Question 1, which determinant of supply or demand has changed in the market for horsemeat?
b) Illustrate what has happened to the equilibrium price and quantity of horsemeat.
c) With reference to your diagram, explain why horse stealing has increased.
3. Hi-tech aids are being used more and more to prevent horse stealing.
a) Which determinant of supply or demand is affected as a result? Explain.
b) In a new supply and demand diagram of the market for horsemeat, show what happens to the equilibrium price and quantity of horsemeat as a result.
c) Does this increase or decrease the incentive to steal horses? Explain your answer.
Source Guillermo X. Garcia, "Rise in horse thefts linked to bad beef abroad," USA Today, April 20, 2001.

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