Agarwal, Nikhil. <br/><br/>
Market Failure in Kidney Exchange / 
Nikhil Agarwal, Itai Ashlagi, Eduardo Azevedo, Clayton R. Featherstone, Ömer Karaduman. 
 - Cambridge, Mass.  National Bureau of Economic Research  2018. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w24775 .
 - Working Paper Series (National Bureau of Economic Research)  no. w24775. .
<br/><br/> June 2018. 
<br/><br/> We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30%-63%. 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. 
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