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How Free-Market Kidney Sales Can Save Lives—And Lower the Total Cost of Kidney Transplants: Kathryn Shelton and Richard B. McKenzie
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The recent conviction of a New York man for brokering the sale of black-market kidneys has economists and the general public alike rethinking the 1984 National Organ Transplant Act.1 This law prohibits the free trade of human organs, including, according to President Obama's Department of Justice (DOJ), bone marrow.2 However, a three-judge panel of the Ninth Circuit Court of Appeals ruled unanimously in Doreen Flynn at al. v. Holder that bone marrow donors could be compensated. Part of their reasoning involved the idea that if the government's argument (against compensation) were upheld, then the 1984 law "would prohibit compensating blood donors." The Obama Justice Department is now seeking a hearing by the full Ninth Circuit. What is the DOJ's argument? That bone marrow should not be subject to "market forces" because the resulting price of bone marrow would undermine voluntary donations and price many prospective recipients in need of transplants out of life-saving operations.3

 

If a free market in kidneys were allowed to function, the explicit price of kidneys would rise toward the intersection of supply and demand, or P1. How high is P1? Many people argue that it can be several thousand dollars or even tens of thousands of dollars, mainly because black-market kidney prices have ranged from a low of $2,000 to a high of $300,000.10

 

As reported by Havscope Black Markets, Kidney and Organ Prices (with dates for the various prices from the linked sources provided). Retrieved February 16, 2012 from http://www.havocscope.com/black-market-prices/organs-kidneys/ (with links to sources of various prices). However, economists have estimated that with an expected dramatic increase in the supply of transplantable kidneys, the price of kidneys might go no higher than $1,000 (Adams, A. F., A. H. Barnett, and D. L. Kaserman. 1999. "Market for Organs: The Question of Supply." Contemporary Economic Policy17 (April): 147-155.)