Working Paper: NBER ID: w24775
Authors: Nikhil Agarwal; Itai Ashlagi; Eduardo Azevedo; Clayton R. Featherstone; Mer Karaduman
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.
Keywords: kidney exchange; market failure; transplantation; health economics
JEL Codes: D42; D47; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market inefficiencies (G14) | number of transplants performed (O57) |
| hospitals do not fully internalize benefits of kidney exchange (J32) | misallocation of resources (D61) |
| current rewards for hospitals do not align with marginal product (D29) | further inefficiencies (D61) |
| fragmentation (F12) | transplant efficiency (D61) |
| hospital participation (I11) | transplant outcomes (P27) |
| improved mechanisms (O36) | efficiency (D61) |