Market Power

Musings by an academic economist on the power of markets and the power over markets.

Saturday, February 05, 2005

Black Market Body Parts

Human organs and other body parts cannot be legally sold in the United States. Instead, according to the law, we must rely on altruism: people are allowed to donate them. This law effectively sets a price ceiling on these "goods", a price ceiling equal to zero.

From the Columbia (Mo) Daily Tribune:

Shaken by scandals involving the black-market sale of body parts, University of California officials are considering inserting supermarket-style bar codes or radio-frequency devices in cadavers to keep track of them.
and later:
Every year, thousands of bodies are donated to U.S. tissue banks and medical schools. Skin, bone and other tissue are often used in transplants. New medical treatments and safety equipment such as bicycle helmets are tested on various body parts. And cadavers are used to teach medical students surgical skills and anatomy.

But there also is a lucrative underground trade in corpses and body parts, despite federal laws against the sale of organs and tissue.
The "lucrative underground trade" is a result of the federal laws, not in spite of them. The outlawing of the sale of organs and body parts does not change the demand for them, but it does alter the number available, making them more scarce. People still want body parts and organs and they are willing to sacrifice things to obtain them. One way to obtain them is through a black market.

Sellers in a black market get high prices because 1. the goods traded are made artificially scarce by legal restrictions and 2. the sellers are taking a risk by illegally selling the goods and they must get compensated in return. Making the sale of the goods legal 1. increases the availability which lowers the price (which makes underground trade less lucrative) and 2. destroys the need for a black market.

Of course, the answer to the problem of black markets is more regulation:

"There’s more regulations that cover a shipment of oranges coming into California than there is a shipment of human knees that are going from a body parts broker in one state to Las Vegas," said Todd Olson, director of anatomical donations at Albert Einstein Medical School of New York.
Is there a black market for oranges? I bet there is.