The search for Malaysia Airlines Flight 370 (MH 370) has been abandoned, and three years after the Boeing 777-200ER disappeared, it remains one of aviation’s biggest mysteries. So, what next?
I believe there are free-market incentives that might spur entrepreneurs to mount private searches. A market-based solution would entail a bounty to anyone who locates remains of the aircraft.
Locating the wreckage would undoubtedly help the world determine what happened to the Boeing 777. And that would produce benefits to society, globally. The problem is that no one entity may perceive sufficient benefits to finding the aircraft to fund a continued search.
Credit: Royal Australian Air Force

Over the course of almost three years, the MH 370 search has cost Australia, China and Malaysia combined approximately $150 million. Understandably, after three fruitless years, they have reluctantly decided to stop searching.
We economists call this a “public-good” problem. Investments in public goods tend to be suboptimal because there is a tendency of those who are not paying for them to “free-ride” on the efforts. The free-rider problem here arises because no entity is likely to benefit sufficiently from finding the aircraft to justify paying the entire cost of a renewed search.
However, there may be a creative solution. A consortium—governments, aerospace companies, airlines and other organizations—could pool funds and offer a bounty to anyone who finds MH 370 wreckage. A “menu” of bounties could be offered. Discovering the flight data recorder or fuselage would be of high value, obviously.
An advantage to offering a menu of bounties rather than a single bounty is that it may encourage the production of information by finders of lower-value debris that encourages competition to find high-value components. The risk of offering a single bounty is that locators of low-value parts may be inclined to treat their findings as high-value private information, since such discoveries (if kept private) may enhance their probability of claiming higher-value targets and bounties. Conversely, private information of this kind may enhance investment in finding high-value targets, and the trade-offs between the values of private and public information, and their effects on incentives and behavior (e.g., investment) would need to be weighed carefully.
Suppose for argument’s sake that a single bounty, perhaps $100 million, were offered for the location of the aircraft’s fuselage or flight data recorder. One possibility is that dedicated bounty hunters would respond by investing to find the debris. Another is that some companies would be enticed to invest in equipment that enables them to conduct “incidental” searches, perhaps in joint ventures with specialist firms that supply underwater scanning equipment.
For instance, new seagoing vessels may be fitted with more advanced underwater scanning and detection equipment than is generally required for navigation. Third-party suppliers of such technologies—which are highly specialized and have a limited market—may, for instance, engage with ship builders to extend their market, perhaps with joint-venture and profit-sharing arrangements in the event of a discovery that gives rise to a bounty claim.
Whatever bounty options are optimal, at least two options exist for raising the bounty via public or private sources, or both. The capital for the bounty could be raised directly and invested until it becomes due. Another option may be to announce the bounty terms and conditions, with an insurance policy to cover its payment. In the latter instance, the consortium would need to raise the premium, which would be calculated based on the “risk” that someone is able to collect on the policy. 
Luke Connelly is a professor at the University of Queensland, Australia, and the acting director of its Center for The Business and Economics of Health.  
The views expressed are not necessarily shared by Aviation Week.