In 2008 the estimate is a a quantity demanded of kidneys of 83,146 but a quantity supplied of only 16,864. As you can see, the need for kidneys is increasing but the number of kidneys available each year does not change much. Using a supply and demand analysis we can graph this relationship....
At a price of $0 there is a SHORTAGE of 66,282 kidney's in this market. IF the government set a regulated price of, say $10,000, would that serve as an incentive for more people to donate a kidney? You certainly have to assume yes. In addition to the people who would STILL donate for free (perhaps a family member or someone who does not want money) there would be people selling a kidney, so the SUPPLY of available kidneys would increase relative to the previous level (16,864). The graph below shows a shift of the supply curve to the right.
At $10,000 there is a market equilibrium at, oh say, a quantity of 60,000 kidneys demanded AND supplied. There is STILL a shortage of kidneys but it is something less than before (again, how much exactly, I don't know). It appears this would save lives...Questions to ask yourself...
(1) Is there a moral question involved in allowing people to sell body organs?
(2) Should we allow people to sell an organ solely to make money?
(3) How would this affect people who cannot afford to pay the market price?
What do you think????
UPDATE: A commenter suggested that the supply curve would not shift but would become more ELASTIC. I inserted an alernative supply curve below (in RED) to show this. I am assuming that the first 60,000 would continue to donate for "free" (not likely!!) and that every kidney greater than that would be supplied at some postive dollar amount until we reach the $10,000 regulated price, indicating there would be some Producer Surplus to be had.
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Your graph is wrong. The S curve does not shift. It should be upward sloping so that at the price of $10,000 more people donate but you do not need a whole new curve.
ReplyDeleteAnonymous---you have a valid point. Perhaps a better representation would be the Supply curve "Supply*" would immediately become relatively more ELASTIC indicating that at a higher price the quantity supplied would increase. There would be Producer Surplus at any quantity supplied below the regulated price of $10,000 (some are willing and able to supply a kidney at for less but did not have to).
DeleteThank you for taking the time to point it out. I appreciate it.