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Supply and Demand

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Recent medical advances have greatly enhanced the ability to successfully transplant organs and tissue. Forty-five years ago the first successful kidney transplant was performed in the United States, followed twenty years later by the first heart transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in 1998 a total of 20,961 transplants were performed in the United States. Although the number of transplants has risen sharply in recent years, the demand for organs far outweighs the supply. To date, more than 65,000 people are on the national organ transplant waiting list and about 4,000 of them will die this year- about 11 every day- while waiting for a chance to extend their life through organ donation (Yoakam 1). This figure, when looked at from an economic standpoint, exemplifies a case of supply and demand between organ donors and patients "with a diseased organ". Just as there is a supply and demand in any given market, there are also complementary and substitute goods. Who decides who gets transplants and who doesn't? This question implies that the organ market also needs to have various, effective allocation mechanisms. The organ market has complementary and substitute goods and can use various effective allocation mechanisms.

A person that receives an organ transplant almost always requires several complementary goods. One obvious good is the medical care received for the actual transplant and for follow-up doctor's visits. For most people who undergo an organ or tissue transplant the quality of their life and general overall health improves following the transplant. Persons who receive a transplant are frequently required to take a series of medications that suppress their immune system and prevent their body from rejecting the newly acquired organ. They often will need to undergo frequent medical visits and testing to monitor the transplanted organ. At times, the organ transplant will be unsuccessful and the organ may need to be removed. These people will be placed back on the waiting list for another organ (Yoakam). Two more goods are the medication to prevent rejection and (assuming the patient has insurance) payments made by the patient's insurance company for the patient's care. The donor's family is not responsible for the costs incurred through organ donation. The recipient, most times through their insurance carrier or Medicare pays for all of the costs related to the donation of organs and tissue. If the "price" of organs increases (whether due to an increase in demand or decrease in supply) the demand for the complementary good will decrease.

The converse of a complementary good is a substitute good. In the organ market, a substitute good really depends on what organ is being considered. "People with diseased livers [are] particularly at risk because there is no medical alternative to transplantation for keeping a patientÐ'...alive." The only two obvious substitute goods for a liver transplant would be extensive medical care and pain medications. On the other hand, someone with diseased kidneys has more options. One obvious option would be dialysis. But, when looked at as a whole, the organ market does have substitute goods. If the "price" of organs increases (whether due to an increase in demand or decrease in supply) the demand for the substitute good will increase.

Since the National Organ Transplant Act of 1984 prevents a monetary price from being placed on a donated organ, effective allocation mechanisms must be utilized. Allocation mechanisms must be accessed because the shortage of supply compared to the demand. In any market, allocation mechanisms rely on many factors but some include friendships, "under the table" payments, predicted profit, and personal biases.

In the organ market, several allocation mechanisms come to mind. There is



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