Market Failure in Kidney Exchange

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

No 24775, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30%–63%. 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: D42 D47 L11 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-des
Note: AG EH IO
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Citations: View citations in EconPapers (6)

Published as Nikhil Agarwal & Itai Ashlagi & Eduardo Azevedo & Clayton R. Featherstone & Ömer Karaduman, 2019. "Market Failure in Kidney Exchange," American Economic Review, vol 109(11), pages 4026-4070.

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