When a pet owner decides to give up a pet for adoption or breed more pets, he is callously ignoring the implications for other potential pets.  The pet he gives up for adoption crowds out a home for another animal.  The pet exerts a negative externality on other potential pets.  The decision-maker – i.e. the pet owner – does not take this externality into account and there is overproduction of pets.  Excess pets are euthanized.

When a tomato farmer sells more tomatoes, he is callously ignoring the welfare of other tomato farmers.  The tomatoes he sells crowd out a home for other tomatoes.   But we think the market for tomatoes in principle works quite well.

Why of your fat cat couch potato not like a tomato?  In a new publication, Coate and Knight answer this question.  In the tomato market, there is a market price for tomatoes.  Each tomato producer is small and his output does not affect the price.  But there is a market price for pets and neither buyers nor sellers of pets affect the price.  So what’s the big difference?

Tomatoes you are bored with or cannot support financially do not have to be euthanized.  Stray tomatoes do not wander the city, scavenging rotten meat from trash cans.  Pet euthanasia imposes an external cost that the pet owner does not pay.  Stray pets must be caught by public services.  There is  no easy way to charge the pet owner for these costs.  If there were, pets would be like tomatoes.  But pet owners can avoid euthanasia fees by dumping unwanted pets as strays.  Coate and Knight argue that this  “moral hazard” problem makes it impossible to effectively deal with the externality created by pet owners.  Hence, there is overproduction of pets.

What is to be done?  Taxation of pet ownership is one solution.  Subsidies for spaying are another.  Dog licenses act as a tax.  But cat owners face no government imposed barrier to acquisition of a furry friend.  There must be serious overproduction of cats.  We all know cats generate more allergies than dogs – another negative externality.  This is serious

Obama has made an effort to improve healthcare.  Hopefully he or whoever replaces him will take up pet – particularly cat – overpopulation in the next term.