Market Failure in Kidney Exchange
Clayton R. Featherstone and
No 24775, NBER Working Papers from National Bureau of Economic Research, Inc
We show that kidney exchange markets suffer from traditional market failures that can be fixed to increase transplants by 25%-55%. 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 do not internalize their patients’ benefits from exchange, and current mechanisms sub-optimally reward hospitals for submitting patients and donors. Third, we estimate a production function and show that individual hospitals operate below efficient scale. Eliminating this inefficiency requires a combined approach using new mechanisms and solving agency problems.
JEL-codes: D42 D47 L11 (search for similar items in EconPapers)
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