- Nikhil Agarwal
- Itai Ashlagi
- Eduardo Azevedo
- Clayton R. Featherstone
- Ömer Karaduman
- AMERICAN ECONOMIC REVIEW (FORTHCOMING)
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.Forthcoming Article Downloads