Market Failure in Kidney Exchange

Nikhil Agarwal, Itai Ashlagi, Eduardo Azevedo, Clayton Featherstone and Ömer Karaduman

American Economic Review, 2019, vol. 109, issue 11, 4026-70

Abstract: We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30 to 63 percent. First, we document that the market is fragmented and inefficient; most transplants are arranged by hospitals instead of national platforms. Second, we propose a model to show two sources of inefficiency: hospitals only partly internalize their patients' benefits from exchange, and current platforms suboptimally reward hospitals for submitting patients and donors. Third, we calibrate a production function and show that individual hospitals operate below efficient scale. Eliminating this inefficiency requires either a mandate or a combination of new mechanisms and reimbursement reforms.

JEL-codes: D24 D47 I11 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20180771
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Citations: View citations in EconPapers (20)

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Working Paper: Market Failure in Kidney Exchange (2018)
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