Academic journal article Independent Review

A Free Market in Kidneys: Efficient and Equitable

Academic journal article Independent Review

A Free Market in Kidneys: Efficient and Equitable

Article excerpt

More than one thousand Americans die prematurely every year because they cannot get kidney transplants. In addition, more than forty thousand others suffer while waiting for kidney transplants (United Network for Organ Sharing 1999). Fortunately, this health-care problem--for those involved, a crisis and a calamity--could be virtually eliminated because its cause is clear and a solution is available.

The problem persists even though our medical knowledge and technology and our supplies of appropriately trained medical personnel and relevant equipment are more than adequate for the performance of the number of transplants that would eliminate it. The problem persists solely because of an insufficient number of transplantable kidneys, an insufficiency that exists because both the purchase and the sale of kidneys arc criminal acts under the National Organ Transplant Act of 1984 (U.S. Congress 1984). Economists have shown that legalization of purchases and sales of kidneys would increase the number of kidneys available for transplant.(1) However, they maintain that although the increased number of kidneys available for transplant would reduce the magnitude of the current insufficiency, some insufficiency would remain (Adams, Barnett, and Kaserman 1999; Anderson and Barnett 1999; Barnett, Blair, and Kaserman 1992; Barney and Reynolds 1989; Blair and Kaserman 1991; Block 1988; Carlstrom and Rollow 1997; Hansmann 1989; Kaserman and Barnett 1991; McKenzie and Tullock 1989; Rottenberg 1971; Schwindt and Vining 1986).

That the governmental prohibition of the purchase and sale of kidneys results in the unnecessary suffering and premature death of thousands of people is an undeniable truth. The obvious question is, Why does this prohibition remain in force? The literature provides three answers.

First, those who benefit from the current system prefer the status quo. Therefore, they engage in rent-seeking behavior to maintain the prohibition against the purchase and sale of kidneys (Barnett 1988; Barnett, Beard, and Kaserman 1993; Barnett and Kaserman 1995; Barney and Reynolds 1989).

Second, wealthy people who need a kidney would bid up the price of the limited supply in order to acquire one for themselves. Therefore, the "poor" would be priced out of the market and have to do without a transplant. Moreover, to allocate such an essential scarce good on the basis of wealth is morally repugnant (Barnett, Beard, and Kaserman 1993; Barnett, Blair, and Kaserman 1992; Blair and Kaserman 1991; DeJong et al. 1995).

Third, if a free market for kidneys existed, only poor individuals would sell kidneys, and such sales would be coercive in nature. A market for an essential body part in which only the poor would be the sellers, and coerced sellers at that, is morally outrageous (Barnett, Beard, and Kaserman 1993; Barnett, Blair, and Kaserman 1992; Blair and Kaserman 1991; DeJong et al. 1995).

We agree with the first answer, which is well developed in the literature. Our primary purpose of this paper is to refute the second answer by correcting the faulty economic analysis on which it rests. We also refute, with a more complete economic analysis, the third answer.

The Demand for Kidneys and Economic and Medical Shortages

It is necessary to distinguish two possible meanings of shortage. The first is the customary meaning in economics, which we refer to as an "economic shortage." The second, which we refer to as a "medical shortage," we define as a situation in which. regardless of whether or not an economic shortage exists, someone who needs a kidney transplant cannot get one because no transplantable kidney is available. The current literature explains why, without the prohibition against commercial transactions in kidneys, the economic shortage would be completely eliminated. However, it also maintains that because even in a free market the opportunity cost of the marginal kidney would, at some point, exceed the demand price, some people who needed a kidney transplant would still have to do without. …

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