Optimal organization of surrogacy contracts and underinvestment

Amrita Pramanick and Swapnendu Banerjee (Bandyopadhyay)

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a model of commercial gestational surrogacy in which a childless couple approaches a prospective surrogate, who is willing to gestate for the couple. The surrogate’s care is non-contractible. We show that if the surrogate doesn’t have any wealth, at the optimum, she is always found to put in sub-optimal effort. Put differently, the surrogate cannot be made a residual claimant and therefore eliciting first best care is never optimal. Therefore the paper, in a hidden action framework, formalizes this ‘inefficiency’ inherent in the Indian ‘rent-a-womb’ market.

Keywords: Surrogate; intended-parents; surrogacy agency; monitoring; moral hazard (search for similar items in EconPapers)
JEL-codes: D10 (search for similar items in EconPapers)
Date: 2014-06-01
New Economics Papers: this item is included in nep-cta
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Related works:
Journal Article: Optimal Organization of Surrogacy Contracts and Underinvestment (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56961

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