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I was having a discussion with somebody about organ transplants. I gave the free market pov that allowing the sale of organs would greatly increase the supply, and the all-in price would come down greatly if everybody knew that they (or their heirs) could profit by making their organs available (it might even encourage a few people to adopt a healthier lifestyle in order to not destroy a valuable asset, and maybe encourage businesses - like financial middlemen - to get into the game).

The person I was discussing with agreed with the argument -- in theory -- but countered that it was unfair that a rich person would have a better opportunity to get a transplant and that, indeed, a poor person's best (and maybe only) chance was to use the current lottery system.

My question -- does anybody know an example of something analogous to human organs whose supply was controlled, whose cost was extremely high and supply very low, and then became available on the market and as a result became readily available because of increased supply and/or lower price? My one possible answer is the abolition of rent controls. I was hoping for an example that was more understandable to my friend. Perhaps certain items that were, by law, exclusively available to the aristocracy in the past, and that later became something that everybody was able to afford.

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  • $\begingroup$ You might enjoy this short Youtube video about organ transplant economics: youtube.com/watch?v=7C1fPocIFgU $\endgroup$
    – mjt
    Aug 25, 2020 at 8:56
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    $\begingroup$ politics.stackexchange.com/questions/56270/… In this recent question answers provided good reasons not to use the market for blood/organ distribution/allocation. Short: Quality would suffer even if you don't care about the moral issues. $\endgroup$
    – Nobody
    Aug 25, 2020 at 11:38

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The Iranian organ market

It might be worth looking into the organ market in Iran. Unlike in other countries, it is legal to sell your kidney to patients who need a new one. The process is regulated and charities actively help pay for patients who cannot afford to pay the donor themselves.

The result is that a kidney, which would cost more than $100.000 on the global black market can be bought for a few thousands of dollars. This also highlights an overlooked problem with the concern that a free market would put rich people in front of the line. The fact is that very rich people can always find a way to acquire the goods they want. If they do it illegally, they can hire expert lawyers to get them out of trouble.

The example of Iran shows that allowing people to sell their organs for profit will lower the barrier to entry to the point where middle class people could conceivably afford one. It also becomes possible for charities to afford to buy organs for the poor. This would not be possible if they were to pay the black market price or wait indefinitely to win the waiting-list lottery.

https://en.m.wikipedia.org/wiki/Kidney_trade_in_Iran

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    $\begingroup$ The paper Paying kidney donors: time to follow Iran seems to have more detailed references. $\endgroup$
    – Giskard
    Aug 24, 2020 at 14:40
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    $\begingroup$ I assume the externalities for the donors are out-of-scope of this question. $\endgroup$
    – user253751
    Aug 24, 2020 at 16:43
  • $\begingroup$ @user253751 That might be an interesting follow-up question. You should make a new post for it! $\endgroup$
    – Ole Krarup
    Aug 24, 2020 at 19:18
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One example of what you are looking for would be drug prohibition. A drug prohibition cannot effectively eliminate drug supply only suppress it so I suppose that would qualify as control of supply.

Studies show that lifting drug prohibition leads to higher availability and lower prices for drugs but at the same time these effects are not always large even if they are statistically significant (see Bretteville-Jensen 2009 or Miron 2006).

This being said it seems to me that your friend is making a moral argument not economic one. According to Becker & Elias (2007) the value of kidney on a free legalized market could be estimated to be somewhere between $\\\$7500$-$\\\$27500$, even at the lower estimate this could still be too much for some poor families that might not be able to afford such kidneys and market could crowd out charitable donors who would be in its absence indifferent between donating to someone relatively poor vs someone relatively rich (even though overall the number of transplants is estimated to increase by $32-52\%$). If your friend objects on moral grounds you should look for moral arguments not economic ones.

Edit: I accidentally misread a table the $\\\$45000$ was mean estimated price for livers not kidneys but I updated the values and argument does not change.

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    $\begingroup$ Poor families might even have to sell their kidneys. Which is better, being poor, or being slightly less poor and missing a kidney? $\endgroup$
    – user253751
    Aug 24, 2020 at 16:44
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    $\begingroup$ @user253751 that is a good question. As I read the literature in a well-regulated kidney market people would generally participate if they would consider the latter to be a better alternative. Of course, some moral quandaries beyond the scope of economics will still remain. $\endgroup$
    – 1muflon1 ♦
    Aug 24, 2020 at 17:01
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    $\begingroup$ There are plenty of regulations designed to protect people from their own past self, even things that seemed like good ideas at the time. We know that you know that motorbike helmets are safer but you don't want to look like a dweeb. Well now you can wear one without looking like a dweeb because it's the stupid government making you do it. We know you're happier on the inside. $\endgroup$
    – user253751
    Aug 24, 2020 at 17:21
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A counter point:

When you offer to pay people for something, which they were going to do voluntarly, they can decide to not do it anymore.

So (and this is only conjecture sorry), by creating a free market, the number of people wanting to participate may decrease.

It also makes you wonder about the quality of the merchandise when someone is willing to sell at rock bottom prices ha ha. You really don't want to find a bargain on eBay!

Also imagine the arguments at the reading of the will, over who gets to sell grandma's heart and liver and who gets the lake house etc.

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