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Solving the Kidney Shortage via the Creation of Kidney Donation Co-operatives

Many people object to the creation of a market for kidneys on the grounds that such reform would hurt those patients unable to afford the market price of a kidney and that donors do not understand the risks they’re taking when donating. In this paper, we propose a mechanism, the kidney co-operative, designed to provide sufficient incentives to alleviate the kidney shortage while at the same time addressing the concerns regarding the potential losers from reform. We show that it is reasonable to expect that the number of transplants will be larger under the kidney co-operative mechanism than under either the status quo or a conventional market mechanism. The online appendix for this paper is available at: http://ssrn.com/abstract=2390352.