THE RUSH TO TRANSPLANT AND ORGAN SHORTAGES

Normally, economists expect entry to improve industry performance. The effects of entry, however, can become perverse. Here, we examine the causes and effects of observed entry into the transplantation industry. Entry appears to be caused by economic rents created by the shortage of organs resulting from the current policy proscribing payment to organ donors. Under this policy, entry has little effect on the number of transplants performed. Consequently, entry spreads available organs among an increasing number of transplant centers, resulting in both increased costs and lower success rates. Thus, current policy simultaneously encourages entry and perverts ifs normally salutary effects.