Question

In the US it is illegal to sell your Kidney (you only need one so everyone could sell one to someone who needed it). This effectively imposes a price ceiling of $0 in this market.

a. What type of market distortion does this policy cause? What are the consequences of this ban?

b. How does lifting the ban (that is making it legal to sell your kidney and allowing market forces to determine price and quantity) solve this distortion? Why would this be more efficient from an economist’s point of view?

c. Discuss the differences between (a) and (b). Think about the participants in the market. Who are the producers and who are the consumers of kidneys? If (b) is more efficient why do we maintain the ban? Justify the ban on selling one’s organs.

Answer 1

1. Price ceilings prevent a price from rising above a certain level.

When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result.

This shortage will lead to black markets or illegal organ trafficking. Poor people would be forced into organ sale. Sometimes, organ might be even stolen without a person's consent.

2. When ban on Kidney sale is taken away. The problem of excess demand can be avoided. The people who are able and willing to sell their Kidney would be able to do it. This will be more efficient as people who are willing to sell their Kidney will be offered payment.

3. The producers are the people who are healthy and has two functioning kidneys. The consumers are the people who are sick and who require Kidney for transplant. From the point of view of Economists, the market system of Kidney sale is more efficient.

But we cannot justify the sale of organs from a humanitarian perspective. Human beings have a dignity. Their organs should also be handled with dignity, When we are donating Kidney, that is a charity. But we cannot legalise organ sale because if we do so, then we might up end up objectifying human body.

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