MBA 5010 Week 4 assignment rev 2 Part B
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Webster University *
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Apr 3, 2024
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Week 4 Assignment (Part B)
Webster University
Explain how this is in essence like the government has imposed a price ceiling of zero on the market for kidneys, thus creating a shortage.
In the United States, it is illegal to sell organs, including kidneys. Many people are organ donors for when they pass away, but not many living people offer to donate their organs for zero incentive. According to Davis and Crowe (2009) “In the United States and throughout much of the developed world… one problem dominates all others: the chronic and increasingly acute shortage of organs” (pgs. 587-588). Due to the government making the sales of organs illegal, they have essentially imposed a price ceiling of zero on the market for kidneys which has created a shortage. People can donate
their kidneys for no financial gain or zero dollars. These organs, kidneys, are important for reducing waste from bodies, and without them people must receive kidney dialysis treatment and
other treatments to ensure their bodies are functioning appropriately. This lack of financial incentive and the possibility of extended medical treatment leads to less people offering to donate their kidneys, which then creates this shortage. S1
Price
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Price ceiling = $0
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Illegal 0
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Graph 1
This graph represents the shortage created when the price ceiling is set at $0 for the kidney market. The price ceiling makes it illegal for any sale of kidneys over $0. Supply is limited due to this price ceiling and demand is increased. Discuss how a free market for organs such as kidneys might result in benefits. A free market is a market that is not controlled by the government. Without the control of
the government, there would be no price ceiling, meaning that people could charge and pay whatever they see as feasible for organs such as kidneys. This free market could result in a couple different benefits for the buyers and sellers of kidneys.
One possible benefit would be an increase in supply for kidneys. This would benefit sellers of the kidneys by allowing them to make extra money. This would also benefit the buyers as they would be able to purchase a kidney that they need to function appropriately. The benefits would also include less wait time for those in need of a kidney transplant which would increase their quality of life. This graph represents the benefits of having a free market for kidneys versus a market with a price ceiling of $0 as displayed in Graph 1. Without the price ceiling of $0 imposed, the price and quantity of kidneys sold and distributed to those in need would both increase to an S1
Price
p0
q0
Graph 2
D1
0
Quantity
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amount greater than 0 as shown in Graph 2. This would be beneficial for both buyers and sellers of kidneys. What value might be created from a free market for kidneys. Specifically discuss how sellers might be better off and how buyers might be better off. There are multiple ways value might be created from a free market for kidneys. As previously mentioned, an increase in supply of kidneys would be a value that this free market would create. This value is beneficial for both buyers and sellers of kidneys.
There are a couple advantages for sellers of kidneys with a free market for organs. Currently, people who donate their kidneys do not receive any financial gain or compensation for
this act. The free market would allow the sellers to make a financial gain from selling their kidneys to those in need. Since kidneys are an essential organ, most sellers will be able to sell for
a higher price profiting from this sale. There are also a couple advantages for buyers of kidneys with a free market for organs. With the lack of financial incentive for sellers, currently, there is a lack of kidneys available for those who need a kidney. With a free market, and more financial incentives for sellers, there would be an increase in kidneys allowing those in need to receive a kidney. This increase in kidneys available would also allow buyers to explore a broader market and they could purchase a
kidney more easily. Barnett, Blair, and Kaserman (1996) explain that currently people needing organ transplants “will experience declining health, reduced quality of life, job loss, lower incomes, and depression while waiting, sometimes for years, for the needed organs” (p. 8). Therefore, having increased access to these organs can help reduce these symptoms and ailments
for those in need of organ transplants. Would this lead to an efficient allocation of resources?
Efficient allocation of resources is a result from when benefits outweigh losses or costs for goods or services. A free market for kidneys would promote sellers to sell their kidneys, increasing the amount of kidneys available for buyers who need a kidney and can afford the cost.
These benefits can be shown in Graph 2. A potential increase in quantity provided and price allows sellers to increase the supply provided and allows buyers an increase in kidneys available.
Costs or losses could include fewer organs being available for those who can’t afford the cost and an increase in bad organs being sold (Albertsen, 2020). Without a price ceiling, people could increase the price of kidney sales to whatever they see fit, which could limit those who are poor from being able to afford and receive the kidneys they need. Due to the uncertainty of how people would react to a free market for organs, it is difficult to determine if it would lead to an efficient allocation of resources. Are there any other issues to consider if there was a free market for kidneys such as fairness.(e.g., would only those most willing and able to pay for a kidney be the ones that benefit).
There are a couple other issues to consider if there was a free market for kidneys. One of these issues would be fairness. With a free market, there wouldn’t be a price ceiling, so the price of kidneys would be high. Due to the high costs, not everyone who needs a kidney would be able
to afford one. The selling of kidneys would also target and interest people who are lower class and lower-middle class due to the quicker turnaround for a large sum of money. Although other classes could take an interest in selling their kidneys, they may lose interest when educated about
the potential risks of having a kidney removed. The people in the lower and lower-middle class may seek this route more frequently, and they may not fully understand the concept and risk of what they are doing when medical staff try to explain the potential risks to them. Overall, fairness is something to be considered when thinking about a free market for organs.
References
Albertsen, A. (2020). If the Price is Right: The Ethics and Efficiency of Market Solutions to the Organ Shortage. Journal of Bioethical Inquiry, 17(3), 357–367. https://doi-
org.library3.webster.edu/10.1007/s11673-020-09981-y
Barnett, A. H., Blair, R. D., & Kaserman, D. L. (1996). A market for organs. Society, 33(6), 8–
17. https://doi-org.library3.webster.edu/10.1007/BF02701857
Davis, F. D., & Crowe, S. J. (2009). Organ Markets and the Ends of Medicine. Journal of Medicine & Philosophy, 34(6), 586–605. https://doi-org.library3.webster.edu/10.1093/jmp/jhp047
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