I first heard of this idea from Terry Pratchett, who as well as explaining the problem gave a possible solution:

> Shortly before the Patrician came to power there was a terrible plague of rats. The city council countered it by offering twenty pence for every rat tail. This did, for a week or two, reduce the number of rats – and then people were suddenly queuing up with tails, the city treasury was being drained, and no one seemed to be doing much work. And there still seemed to be a lot of rats around. Lord Vetinari had listened carefully while the problem was explained, and had solved the thing with one memorable phrase which said a lot about him, about the folly of bounty offers, and about the natural instinct of Ankh-Morporkians in any situation involving money: ‘Tax the rat farms.’

—Terry Pratchett, Soul Music