Wm. Feagin, Jr.
ECON 5180
Fall 2001
Are Competitive Markets for Human Organs Viable? The Economic Effects of Prohibition
Introduction
Free-market economists generally believe that competitive markets are good because they produce
efficient outcomes. Policy-makers sometimes decide that government intervention in certain markets is
necessary to achieve other goals. Sometimes they impose trade barriers to protect domestic producers.
Sometimes they tax certain markets or impose direct controls to counter negative externalities or provide
subsidies to a market to capture positive externalities. Occasionally, they impose price ceilings or floors in
markets in the interest of promoting fairness. And sometimes, they take the drastic step making trade in
certain markets illegal.
What motivates policy-makers to enact and enforce prohibition laws? Frequently, it is because the
prospects of open trading in a market raises serious moral or ethical objections. For example, in the United
States since 1863, it has been illegal to buy and sell human slaves. For the most part, prostitution is illegal
is illegal in this country. It is illegal to buy and sell children for adoption. Until 1973, it was illegal in most
states to obtain and perform abortions (Bergstrom and Miller, 2000: 95-96).1
Despite government efforts to promote moral and ethical standards by making these markets
illegal, prohibition laws rarely are successful in eliminating the trading entirely. However, the efforts to
1
Governments enact and enforce prohibition laws for other reasons as well. For example, in the period
from 1920 to 1933, in response to political pressure brought by the Women’s Temperance Movement, the
United States government prohibited the sale and purchase of alcoholic beverages. Similarly, federal and
state governments (and well as many other countries) prohibit the sale and purchase of certain drugs that
are believed to be addictive and/or otherwise harmful. In many states gambling is illegal (except through
state-sponsored lotteries). Apparently, some lawmakers believe that consumers do not realize the harm
caused by alcohol, drugs, and gambling. Such lawmakers support prohibition of these goods in hopes of
protecting consumers from making ill-advised choices. It is illegal in most countries to buy or sell animals
(or their body parts) belonging to endangered species. Presumably, lawmakers who favor endangered
species legislation aim to protect the endangered animals from being captured or killed for the market. In
the 1950s, the sale of yellow-dyed margarine was illegal in the states of Minnesota and Wisconsin. This
prohibition was maintained by political pressure from dairy farmers who feared that the availability of
colored margarine would reduce the demand for butter (adapted from Bergstrom and Miller, 2000: 95-96).
enforce the prohibitions do have economic consequences. This paper examines the economic effects of
prohibition of the competitive market for human organs. 2
Unfortunately, there is a paucity of empirical research examining the effects of prohibition of
markets for human organs. Obviously, one of the principle effects of prohibition of market for human
organs is an absence of readily available empirical data. Consequently, determining the demand and supply
curves, price elasticities, buyers’ and sellers’ surpluses, and total spending in these markets is problematic.
In lieu of empirical data, this paper will examine the economic effects of prohibition in an experimental
market for human kidneys.
Initially, however, I shall discuss the theoretical economic effects of a competitive human organs
market. Additionally, objections to applying a competitive model to a real-world market for human organs
will be examined. The theoretical outcomes will then be evaluated against the observed outcomes of the
experimental market. Finally, obstacles to establishing a real-world market for human organs and
alternatives will be presented.
A Competitive Market for Human Organs – Theoretical considerations3
Demand for and supply of transplanted human organs. People need organ transplants for a variety of
reasons. Liver transplants save the lives of patients who have suffered from total liver failure resulting from
hepatits B. Lung transplants permit cancer victims to continue drawing breathe. People who receive kidney
transplants are saved from the inevitabilities of renal failure. Although medical technologies have been
developed that allow patients to survive for limited periods of time while waiting for a transplant, dire
shortages of these organs exist. Because in most cases transplants are needed to avoid death, it is
2
This essay is not an advocacy paper. I do not take a position on the merits of open markets for human
organs, altruistic donations, or other alternatives. Additionally, it is not the purpose of this paper to present
and argue certain facts related to this issue such as the dire shortages of human organs for transplantation.
There is no dearth of published articles establishing these facts. (For example, see Jefferies, Barnett and
Kaserman, Dhooper, Young, Calstrom and Rollow, Boudreaux and Pritchard). Finally, this paper is not
concerned with ethical debates pertaining to: human organ transplants, cloning, xenografts, artificial
organs, quality of life, power over life and death, or any other related issues, except insofar as these issues
affect the economic outcomes of a potential competitive market for human organs (see section entitled
Real-World Obstacles and Alternatives below). (For articles dealing with ethical arguments, see ScheperHughes 1, Scheper-Hughes 2, Gutmann and Land, Parmly, Caplan, Blumstein and Sloan, and Veatch).
3
This analysis is based on Barnett, Blair, and Kaserman (1998), Kaplan, Van Buren, and Tilney (1998),
Morris and Sells (1998), Schiller (1997), Jeffries (1998), Reynolds and Barney (1988), Prottas, (1993),
Thorne (1990), and Hansmann (1989), among others.
reasonable to assume that a demand curve for most organs would be downward-sloping and highly
inelastic.
Assuming a competitive market where people have property rights over their own body parts, that
is one in which it is legal to sell one’s own organs, how many people would be willing to sell a kidney for
$1,000. How many would sell for $2,500? ….or $10,000? The supply curve for organs is likely to be
somewhat inelastic as well, but likely less elastic than the demand curve. Let’s assume the market for a
particular organ depicted by Figure 1.
The competitive model predicts a market price and quantity indicated by point A. Total spending
on organs is represented by the rectangle 0Q*AP*. Sellers’ surplus is the shaded area to the left and below
the equilibrium price and above the supply curve over to the y-axis. Buyers’ surplus is the shaded area to
the left and above the equilibrium price and below the demand curve over to the y-axis.
The practical point is this: if organs are available for sale in competitive markets, sellers would be
better off because their marginal costs of selling their organs (their minimum willingness-to-sell or
reservation price) is less than the equilibrium price. Similarly, buyers would be better off because the
equilibrium price is less than the marginal benefits of buying organs (their maximum willingness-to-pay or
reservation price). Indeed, the existence of these benefits provides incentives for donors to enter the
market in sufficient numbers to eliminate the existing shortages of organs. 4
Some Objections to Applying a Competitive Model to the Market for Human Organs. The model of perfect
competition assumes that markets and prices allocate scarce resources efficiently provided that certain
assumptions hold. It is clear that there are notable shortcomings in the model as it applies to the market for
human organs.
A perfectly competitive market has the following characteristics:
4

There are many buyers and sellers. How many is “many”? The model assumes that there enough
buyers and sellers in the market acting as competitors with each other to prevent any single buyer
or seller has enough market power to set the price of the good. In the market for human organs,
there are clearly many potential buyers and sellers so that individual participants must act as pricetakers. Price-taking behavior is also contingent, of course, on whether the remaining conditions
are satisfied.

The produced goods are identical (or homogeneous). This means that there are no qualitative
differences among the products supplied to the market; therefore, buyers are indifferent as to
whom they buy from. This condition surely cannot be satisfied in the human organs market.
Differences among donors in terms of lifestyles, health status, and other variables undoubtedly
affect the quality of individual organs. More fundamentally, to minimize the chance rejection, a
donated organ must be “matched” to an appropriate recipient. Consequently, buyers have an
incentive to make their decisions concerning “who to buy from” based on these qualitative
differences.

There are no barriers to either entry or exit. Obviously, prohibition precludes this condition from
being satisfied. However, assuming a free market, the only real barriers to entry would be
satisfying the medical criteria as a donor or recipient. Exit is impossible once an organ has been
donated or transplanted.

Buyers and sellers have perfect information. The model assumes that buyers and sellers must act
as competitors in order for price-taking behavior to prevail. Competitive behavior, in turn,
requires complete information so that market participants can make choices that serve their selfinterest. If information asymmetries are present, then the model does not hold and its efficient
outcomes cannot be realized. In the market for human organs, both adverse selection and moral
It has been noted by numerous analysts that poorer people would be more likely to sell their organs in a
competitive market than relatively wealthy people since the marginal benefits to the poor are greater.
Critics contend that this phenomenon is tantamount to economic coercion of the poor since they would be
enticed to engage behavior that they would prefer not to undertake. However, this line of reasoning is
invalid since a competitive market assumes that the donor retains property rights over his body parts. If an
impoverished person values the payment for the organ less than he values preserving his body intact (dead
or alive), then he or she simply refuses to supply the organ to market. “Some may object that a poor person
may feel compelled to sell his or her organs due to the family’s impoverished circumstances when, in fact,
he or she would prefer not to do so. The market is not the source of the problem. The economic
circumstances of the poor may induce them to do many things that they would not do otherwise….work in
coal mines, neglect their children while working two jobs, join the military, drop out of school, sell family
heirlooms, and a host of other undesirable actions” (for example, see Barnett, Blair, and Kaserman, 1998:
212-213). Participation in a competitive, either as a supplier or demander, is completely voluntary.
Nevertheless, the likely correlation between economic status and organ supply is worrisome for ethicists.
hazard problems exist. Both donors and recipients have an incentive to conceal information about
their health status, lifestyle, and habits. Recipients have, at least hypothetically, an incentive to
engage in risky behavior once they have received a transplant. For example, a liver transplant
recipient may indulge in alcohol consumption or a lung transplant recipient may smoke cigarettes.
The moral hazard problem is probably more relevant in non-market allocation schemes.
The Effects of a Prohibition on Our Theoretical Competitive Market. For the sake of the analysis, we
will equate the prohibition on the sale of organs with a government-imposed price ceiling for organs of zero
(Schiller, 1997: 1). Figure 2 depicts the economic effects of the prohibition.
Examination of the graph reveals several important effects. At the government-imposed price
ceiling of zero, the quantity of organs demanded (Qd) substantially exceeds the quantity supplied (Qs). A
predictable organ shortage results. It is important to note, however, that the quantity of organs supplied is
not likely to be zero in the prohibited market; some people will donate their organs for reasons other than
financial payment (i.e., altruistic motives, family member or personal acquaintance of recipient). These
organ donations will be allocated by some mechanism other than the market, perhaps some governmentdeveloped ranking system. As a consequence, only recipients who are fortunate enough to get a donated
organ will benefit. The most total benefits that demanders can receive from these donations is represented
by shaded area from 0 to Qs and under the demand curve. Total benefits to demanders could possibly be
less because, unlike the market which ensures that the organs will be allocated to the demanders that value
them most highly, there is no guarantee that the devised ranking system will do so.
Another outcome is theoretically possible from as a result of the prohibition of the organ market.
If we assume that the prohibition does not eliminate the market for organs but instead drives it underground
(creates a black market), then the previous analysis in which we suggested that prohibition establishes a
price ceiling of zero does not hold. If we assume that trading is bound to continue (illegal though it may
be), what are the economic effects of the ban. Furthermore, we shall assume for the sake of analysis that,
in its effort to enforce its ban on this organ market, the government either imprisons or fines anyone who it
catches selling an organ, increasing the marginal costs of supplying an organ to the market. Figure 3
illustrates the effects of the ban.
The increase in the marginal costs of sellers resulting from the potential penalties imposed by
government for violations of the ban is depicted as a shift in the supply curve to the left (Supply to Supply’).
Thus, the equilibrium price that results in this illegal market is substantially higher than in our original
competitive market (price increases from P* to P’). Notice that the equilibrium quantity of organs
decreases (from Q* to Q’) by small amount relative to the price increase. This result reflects the fact that
the demand for organs is relatively price inelastic. Consequently, one (likely unintended) effect of the ban
on the organ market is that total spending on organs increases (the area 0Q’AP’ is significantly larger than
the area 0Q*BP*). However, because of the relatively inelastic demand (and supply) for organs, the ban
appears to have little impact on sellers’ and buyers’ surpluses.
Which of these two theoretical outcomes is most likely to occur in the real world market for
human organs? While bearing in mind the objections previously raised concerning the application of the
competitive model to the market for organs, it seems intuitively likely that a certain amount of black market
trading in human organs will continue despite the government ban. To suggest the ban operates as a
perfectly-enforced price ceiling seems naïve at best. However, the extent of black market trading remains
open to question. Our conclusions may depend on whether we confine our analysis strictly to the market in
the United States or whether we prefer considering the market in a world-wide context. It is unlikely that
much by way of outright trading for organs occurs in the United States and other westernized, democratized
countries. However, it is widely known that there are vigorous markets operating in Asia – particularly in
India, the Philippines and China (Veatch, 2000: 151-155; American University Website, Mandala Projects,
2001: 1-10). Ultimately, the question can only be answered by empirical analysis.
The Experimental Market for Human Kidneys.5 As mentioned previously, empirical testing of the
competitive model for a human organs market is difficult. The fact is that, because human organs markets
are prohibited, real-world data on prices, demand, and supply simply do not exist. That is to say that they
do not exist in a readily-accessible form that is conducive to the type of economic analysis required here.
In the absence of empirical data, we will examine data generated in an experimental market for human
kidneys.6
Market Features. The experiment is designed to examine the effects of a ban imposed by the government
on a competitive market for human kidneys. There were a total of 27 participants in the experimental
5
Researchers in the field of experimental economics have generally concluded that experimental designs
usually require simplifying assumptions that do not perfectly reflect real-world markets, the outcomes of
experimental markets generally approximate real-world outcomes (Davis and Holt: 1993; Friedman and
Sunder: 1994; Kagel and Roth: 1995; Bergstrom and Miller, 2000).
6
This experimental market for human kidneys is modeled on an experimental market for drugs created by
Ted Bergstrom and John Miller (Bergstrom and Miller, 2000: 91-118).
market.7 Eleven participants were assigned the role of potential kidney supplier (donor) and 16 were
potential demanders (transplant recipients).
To make the assumptions of the market seem plausible, kidney suppliers were assumed to have
property rights only over their own kidneys (two each); no brokers or “middle men” were allowed. Further,
the market assumes that each supplier (donor) can only donate his kidney at the time of his death and that
the revenue that is generated by the sale of his organ(s) is distributed to a beneficiary of his choice (i.e.,
family member). Consequently, each supplier was permitted to sell one or both of his kidneys at the time
of his death, depending on whether he could find a buyer with whom he could negotiate a transaction. All
suppliers were assumed to have a reservation price (minimum willingness-to-sell or marginal cost) of
$10,000 per kidney. There are no “production costs” in any real sense, so participants were encouraged to
think of their $10,000 MWTS as an amount they would be willing to pay to ensure that their organs were
not harvested. A seller’s surplus is the difference between the price he negotiates for one of his kidneys
and his MWTS for that kidney (Seller’s surplus = Price – $10,000).
The market included two types of demanders: Type A demanders are those facing imminent death
unless they receive a transplant and Type B demanders are those whose lives can be sustained for an
indefinite period using alternatives treatments (i.e., dialysis). Type A demanders have a reservation price
(maximum willingness-to-pay or marginal benefits) $30,000. Type B demanders have an MWTP of
$15,000. Both types of demanders are only permitted to buy one kidney. A demander’s surplus is the
difference between her MWTP and the price she negotiates for a kidney (Demander’s surplus = MWTP –
Price).
The experiment included two market sessions. 8 In the first session, demanders and suppliers of
kidneys negotiated trades for kidneys in an open market free from any restrictions imposed by the
government. Each supplier was free to sell both, one, or none of his kidneys. However, since each buyer
7
The participants in the experimental market were students enrolled in one of my sections of Introductory
American Government at Temple College during the Fall 2001 semester. The experiment was conducted
on October 11, 2001.
8
Each session included two practice (warm-up) trading rounds so that participants could learn some of the
nuances of trading and negotiate the best deals possible in the official round of trading. Upon examining
the transactions in the practice rounds, we discovered that several participants had negotiated deals in
which they ended up earning a negative surplus. However, they were able to correct those errors in the
official rounds.
can buy only one kidney, a supplier who wants to sell both of his kidneys must make a deal with two
different buyers.
In the second session, government enforced the prohibition such that regulatory officers
intervened and intercepted the sales contracts for half of the trades that are negotiated. In this session,
sellers were required to make deals for both kidneys before they were allowed to turn them into the market
manager. After a seller negotiated a contract with his first buyer, he was required to find a second buyer
and turn in the two sales contracts simultaneously. When a seller brings the two contracts to the market
manager, government regulators appear and randomly intercept one of the two contracts. The seller is still
faced with his $10,000 reservation price for the transaction that slipped past government regulators;
however, he has an additional cost of $15,000 imposed by the government as a penalty for breaking the
law. Therefore, in session 2, the seller’s reservation price is $25,000 and his surplus is the difference
between the price he negotiates for the kidney that he manages to sell and his new MWTS (Price –
$25,000). The buyer whose contract was intercepted will not have to pay the negotiated sales price, nor is
she penalized by the government; however, neither will she receive the organ. Buyers whose contracts are
intercepted by regulators are free to return to the market to negotiate a deal with another seller.
Predictions of the Competitive Model for Kidneys. Given the features of the market outlined above, the
competitive model for the market is depicted by Figure 4. 9 The demand curve represents the distribution of
reservation prices between the two types of demanders. Recall that Type A demanders had a reservation
price of $30,000 and Type B demanders had a reservation price of $15,000. This means that at a price of
9
The demand and supply curves are not smooth because we have only two different values for the
demanders’ MWTP and only one value for the suppliers’ MWTS.
over $30,000 no kidneys would be demanded in this market. 10 If the price is exactly $30,000, each of our
eight Type A demanders are indifferent and may, taken together, demand anywhere from 0—8 organs. If
the price is greater than $15,000 but less than $30,000, then certainly all 8 Type A demanders would buy a
kidney if they could. If the price is exactly $15,000, our Type B are indifferent and any number of those
buyers may buy a kidney. Therefore, the quantity demanded at a price of $15,000 includes our 8 Type A
buyers and anywhere from 0–8 of the Type B demanders; the total quantity demanded at $15,000 then
would range from 8—16 kidneys. Finally, if the price is below $15,000, all 16 demanders regardless of
their type will buy a kidney.
10
Of course, some may object that a person who faces imminent death without a transplant would be
willing to pay any amount to obtain an organ. [I concede that some people with kidney disease might be
willing to pay hundreds of thousands or perhaps even millions of dollars to obtain a kidney. The case a
Florida man who auctioned one of his kidneys on the E-bay web-site is a widely cited example. Before Ebay pulled the ad, the man had received a bid of $5.7 million (Young, 199:1-2).] However, this is quite
separate from saying that there is no maximum amount that a potential recipient would be willing to pay.
Obviously, the concept demand for a good includes not only the willingness of a buyer to pay, but the
ability to pay as well. Furthermore, even if the potential recipient is a multi-millionaire, he still faces
opportunity costs and these imply there is some maximum willingness-to-pay.
The supply curve reflects the fact that each seller faces marginal costs of $10,000 for each kidney
she sells. If the price is less than $10,000, none of our potential suppliers will want to sell their organs. At
a price of $10,000 sellers are simply indifferent to selling. As a result anywhere from 0—22 kidneys may
be supplied to the market.11 At any price over $10,000, each of the 11 sellers will supply both kidneys to
the market (the quantity supplied will be 22).
The model predicts an equilibrium price of $10,000 and a quantity of 16. The market outcome is
efficient because all 16 demanders receive transplanted organs plus a buyer’s surplus, having bought the
organs at a price less than their MWTP. The buyers’ surplus is represented by diagonally-shaded are on the
graph above and to the left of the equilibrium price and quantity but under the demand curve. The model
predicts a buyers’ surplus of $200,000. Because the equilibrium price is $10,000 (equal to their reservation
price) and sellers take the market price as given, no sellers’ surplus is apparent in this model (total surplus
is $200,000). It is important to note that while the welfare of buyers is clearly enhanced by this market,
sellers are not made worse off by selling their organs. This reflects the essence of efficiency: the
reallocation of kidneys from donors to recipients by this competitive market does not make anyone better
off at the expense of someone else. Total spending on kidneys is predicted to be $160,000.
Predicted Effects of Prohibition on the Competitive Market for Kidneys. In this session of the experiment,
the buyers’ MWTPs remained unchanged from session 1, and even though government regulators intercept
some of the purchases, no penalties are imposed on buyers. Therefore, the demand curve for session 2 is
the same as for session 1. However, as a result of intercepted sales and penalties imposed on sellers, the
seller’s MWTS a kidney increases by $15,000. Figure 5 illustrates this effect of prohibition as a shift in the
supply curve to Supply’. The increase in suppliers’ MWTS while demand remains constant results in an
increase in the equilibrium price from $10,000 to $25,000 and a decrease in the output from 16 to 8.
Because demand for kidneys in this market is relatively price inelastic between the two equilibrium price
points,12 the welfare loss resulting from the prohibition is profound, specifically for buyers. Economic
11
Recall that each of our 11 sellers can sell 0, 1, or 2 of his kidneys.
The price elasticity of demand between the equilibrium price in the free market ($10,000) and the
equilibrium price in the prohibited market ($25,000) is -.78. The calculation of the elasticity using the midpoints formula is: %Qd/%P = -8/12 / 15/17.5 = -.67/.85 = -.78
12
theory tells us that when demand is relatively price inelastic, a price increase will result in an increase in
total spending. This model predicts that total spending on kidneys will increase by $40,000 (from $160,000
to $200,000). More importantly, the equilibrium price increase resulting from the increase in sellers’
marginal costs reduces buyers’ surpluses by 80% (from $200,000 to $40,000).
Observed Outcomes of the Experimental Kidney Market: Open Competition and Prohibition. Table 1
summarizes the transactions completed in session 1 of the experimental market. The total number of
kidneys transacted in the market was 16, consistent with the prediction of the model. The average price of
$13,000 is slightly higher than the model prediction of $10,000. Both buyers and sellers accumulated
surpluses in the experimental market, though the model accurately predicted the total surplus of $200,000.
Total expenditures on kidneys was $208,000.
Table 1: Transactions in Session 1 - Competitive Market for Kidneys
Buyer's Seller's
Total
Price (x MWTP (x MWTS (x Surplus (x Surplus (x Surplus (x
Transaction 1,000)
1,000)
1,000)
1,000)
1,000)
1,000)
1
$15
$30
$10
15
5
20
2
12
30
10
18
2
20
3
14
30
10
16
4
20
4
14
30
10
16
4
20
5
14
30
10
16
4
20
6
13
15
10
2
3
5
7
13
30
10
17
3
20
8
12
15
10
3
2
5
9
13
15
10
2
3
5
10
13
30
10
17
3
20
11
13
15
10
2
3
5
12
12
15
10
3
2
5
13
12
15
10
3
2
5
14
11
15
10
4
1
5
15
13
15
10
2
3
5
16
11
30
10
19
1
20
average price
Totals
$13
155
45
200
Table 2: Transactions in Session 2 - Prohibited Market for Kidneys
Transaction
1
2
3
4
5
6
7
8
average price
Totals
Buyer's Seller's
Total
Price (x MWTP (x MWTS (x Surplus (x Surplus (x Surplus (x
1,000)
1,000)
1,000)
1,000)
1,000)
1,000)
$26
$30
$25
4
1
5
26
30
25
4
1
5
25
30
25
5
0
5
28
30
25
2
3
5
26
30
25
4
1
5
25
30
25
5
0
5
25
30
25
5
0
5
35
30
25
-5
10
5
$27
24
16
40
Table 2 shows the observed outcomes in session 2 of the market experiment when prohibition was
being enforced. Average price increased as a result of prohibition from $13,000 to $27,000. The model
predicted a price increase to $25,000. The number of kidneys sold in the prohibited market decreased from
16 to 8 (as the model predicted). Total surpluses were reduced from $200,000 to $40,000. Total
expenditures increased to $216,000.
Conclusions. The goal of this paper has been to determine whether competitive markets are a viable means
for allocating human organs. Because empirical data is not available to test market theory, this study
analyzed data generated by an experimental markets for kidneys. Admittedly, the simplifying assumptions
of the model do not perfectly reflect the real-world situation relating to the supply and demand of human
organs available for transplant. However, application of the competitive model and the analysis of the
experimental data does allow us to reach some conclusions about the effects of prohibition on the supply
and demand for organs that are fairly consistent with real-world conditions.

Prohibition is tantamount to a government-imposed price ceiling of zero for organs. Because the price
is artificially low, quantity demanded far exceeds quantity supplied: shortages are a chronic problem
for virtually all transplantable organs.

Because chronic shortages result from the price ceiling, illegal markets emerge as a partial solution to
insufficient organ supplies. Many thousands of people await organ transplants. Many of those face
probable death if they do not receive a transplant. Consequently, the demand for organs is price
inelastic. Undoubtedly, some of these people are willing to pay a lot of money for a life-saving organ.
On the supply-side of the market, there are many people who are willing to sell their organs for
financial gain. It is important to note that one of the primary effects of prohibition is that it increases
the sellers’ reservation prices because the marginal costs increase. They risk substantial fines and,
perhaps, jail time. As a result the black market price is even higher than the equilibrium price in an
open market.

Prohibition also provides incentives to engage in criminal behavior as well: if the going rate for a liver
is $500,000, criminal elements have a powerful incentive to enter the market. Violations of
fundamental human rights by criminal individuals and public authorities have been widely reported in
many Asian countries for example.

Prohibition of competitive organ markets has encouraged research to develop substitutes. One such
alternative is known as xenotransplantation13 – using pig organs or creating pigs with human genes in
order to breed pigs with human-like organs. From an economic perspective xenotransplants are
promising because they have the potential of solving the chronic shortages of donated human organs.
This would undoubtedly have downward pressure on prices, making it possible for a greater number of
recipients to obtain the transplants they need. Additionally, assuming the costs of producing pig
organs would be low enough to make organ harvesting from humans unprofitable, xenotransplantation
has the capacity to effectively end the incentives that support the black market. On the other hand,
13
Other alternatives include artificial organs and cloning (Brock, 1998: 1-3).
there are significant uncertainties about the medical consequences of xenotransplants. Some medical
researchers have argued that these transplants may allow pig diseases such as porcine endogenous
retrovirus (PERV), or some mutated form of PERV, to crossover into the human population (Veatch,
2000:259-271). The existence of these uncertainties reduce the appeal of this alternative.
Opponents of competitive organ markets contend that a major impediment to establishing efficient
organ markets is information asymmetry. If sellers are permitted to profit from selling their organs, they
have no incentive to reveal information about their health status that might decrease the value of their
organs. Finally, others object on the grounds that while markets might be able to allocate organs
efficiently; they do not do it fairly. This argument is premised on the belief that it is unfair to allocate a
necessity of life on the basis of ability to pay. This, however, is an ethical argument rather than an
economic argument. Remember, however, it is an established fact that non-market methods of allocating
organs have resulted in chronic shortages; these shortages undoubtedly costs lives. Apparently, this ethical
position concludes that it is better to sacrifice the lives of the wealthy than to abandon the perception of
fairness to the poor.
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