When Private Parts Are Made Public Goods: The Economics of Market-Inalienability

Abstract

This Essay develops an alternative theory of market-inalienability and applies it in an analysis of the consequences of the ban on markets in organs. Unlike the conventional view-that the ban is responsible for critical shortages-this theory rests on two ideas: (1) When a market in a good is banned, those who assume the task of procurement will turn to alternative means-exhortation-to induce supply; and (2) Legislation that renders a particular good market-inalienable effectively converts the good into common property, which can be analyzed using the well-developed economic theory concerning the allocation of resources owned in common. Theoretically, a ban on a market in a good that costs less to obtain by exhortation than to purchase might yield a larger supply than a market would. The findings imply that it may be the obstacles to adequate exhortation, rather than the inefficiency of appeals to donor altruism, that are responsible for shortages. While this does not suggest that a ban on markets is efficient, it does demonstrate that the ban need not cause a shortage of some limited set of goods and services, which may include organs. Indeed, rather counter-intuitively, a ban could-however inefficiently-enlarge supply.