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Market Failure in Kidney Exchange

Author

Listed:
  • Nikhil Agarwal
  • Itai Ashlagi
  • Eduardo Azevedo
  • Clayton R. Featherstone
  • Ömer Karaduman

Abstract

We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30 to 63 percent. 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.

Suggested Citation

  • Nikhil Agarwal & Itai Ashlagi & Eduardo Azevedo & Clayton R. Featherstone & Ömer Karaduman, 2019. "Market Failure in Kidney Exchange," American Economic Review, American Economic Association, vol. 109(11), pages 4026-4070, November.
    • Handle: RePEc:aea:aecrev:v:109:y:2019:i:11:p:4026-70
    Note: DOI: 10.1257/aer.20180771
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    Cited by:

    1. Carvalho, Margarida & Lodi, Andrea, 2023. "A theoretical and computational equilibria analysis of a multi-player kidney exchange program," European Journal of Operational Research, Elsevier, vol. 305(1), pages 373-385.
    2. Itai Ashlagi & Maximilien Burq & Patrick Jaillet & Vahideh Manshadi, 2019. "On Matching and Thickness in Heterogeneous Dynamic Markets," Operations Research, INFORMS, vol. 67(4), pages 927-949, July.
    3. Alvin E. Roth, 2023. "Market Design and Maintenance," NBER Chapters, in: New Directions in Market Design, National Bureau of Economic Research, Inc.
    4. Josu'e Ortega, 2018. "The Losses from Integration in Matching Markets can be Large," Papers 1810.10287, arXiv.org.
    5. Cheng, Yao & Yang, Zaifu, 2021. "Efficient Kidney Exchange with Dichotomous Preferences," Journal of Health Economics, Elsevier, vol. 80(C).
    6. P'eter Bir'o & M'arton Gyetvai, 2021. "Online voluntary mentoring: Optimising the assignment of students and mentors," Papers 2102.06671, arXiv.org.
    7. Haluk Ergin & Tayfun Sönmez & M. Utku Ünver, 2020. "Efficient and Incentive‐Compatible Liver Exchange," Econometrica, Econometric Society, vol. 88(3), pages 965-1005, May.
    8. Rajnish Kunar & Kriti Manocha & Josue Ortega, 2020. "On the integration of Shapley-Scarf housing markets," Papers 2004.09075, arXiv.org, revised Jan 2022.
    9. Ghanbariamin, Roksana & Chung, Bobby W., 2020. "The effect of the National Kidney Registry on the kidney-exchange market," Journal of Health Economics, Elsevier, vol. 70(C).
    10. Ortega, Josué, 2019. "The losses from integration in matching markets can be large," Economics Letters, Elsevier, vol. 174(C), pages 48-51.
    11. Itai Ashlagi & Alvin E. Roth, 2021. "Kidney Exchange: An Operations Perspective," Management Science, INFORMS, vol. 67(9), pages 5455-5478, September.
    12. Tuan Le & Jon M. Stauffer & Bala Shetty & Chelliah Sriskandarajah, 2023. "An optimization framework for analyzing dual‐donor organ exchange," Production and Operations Management, Production and Operations Management Society, vol. 32(3), pages 740-761, March.
    13. Itai Ashlagi & Afshin Nikzad & Philipp Strack, 2018. "Matching in Dynamic Imbalanced Markets," Papers 1809.06824, arXiv.org, revised Jun 2019.
    14. Klimentova, Xenia & Viana, Ana & Pedroso, João Pedro & Santos, Nicolau, 2021. "Fairness models for multi-agent kidney exchange programmes," Omega, Elsevier, vol. 102(C).
    15. Christopher Neilson & Adam Kapor & Mohit Karnani, 2020. "Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms," Working Papers 635a, Princeton University, Department of Economics, Industrial Relations Section..
    16. Klimentova, Xenia & Biró, Péter & Viana, Ana & Costa, Virginia & Pedroso, João Pedro, 2023. "Novel integer programming models for the stable kidney exchange problem," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1391-1407.
    17. Christopher Neilson & Adam Kapor & Mohit Karnani, 2020. "Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms," Working Papers 635a, Princeton University, Department of Economics, Industrial Relations Section..
    18. Radu-Stefan Mincu & Péter Biró & Márton Gyetvai & Alexandru Popa & Utkarsh Verma, 2021. "IP solutions for international kidney exchange programmes," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 29(2), pages 403-423, June.
    19. Tiago Monteiro & Xenia Klimentova & João Pedro Pedroso & Ana Viana, 2021. "A comparison of matching algorithms for kidney exchange programs addressing waiting time," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 29(2), pages 539-552, June.
    20. Biró, Péter & Gyetvai, Márton, 2023. "Online voluntary mentoring: Optimising the assignment of students and mentors," European Journal of Operational Research, Elsevier, vol. 307(1), pages 392-405.
    21. Kumar, Rajnish & Manocha, Kriti & Ortega, Josué, 2022. "On the integration of Shapley–Scarf markets," Journal of Mathematical Economics, Elsevier, vol. 100(C).

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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