Saturday, April 28, 2012

Kidney Disease does not kill people, government policies on the sale of kidneys kills people....

Ok, maybe my rhetoric is a little harsh---or is it?

Nice example of how a price ceiling imposed by law creates a shortage of a good. Federal Law sets a price of $0 dollars for the price paid to the donor of a kidney.  Hence, the quantity supplied is going to be much less than it otherwise might/would be. 

The graph below shows the quantity demanded for kidneys is much greater than the quantity supplied at a price of $0.  I have a more detailed posting (with Supply and Demand graphs!) HERE.

If people were allowed  compensation for kidney donations would the quantity supplied increase? Would this be a more socially desirable outcome? What are some additional positive and negative implications of allowing the sale of kidneys? 

Keep in mind, the gap between the lines represent people NOT getting a transplant. 
Source: Carpe Diem
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