Following competition consequences I, part II about competition and repugnancy. A repugnant market refers to a market where certain goods or services are considered objectionable or morally unacceptable to buy and sell, despite there being potential buyers and sellers. Examples include markets for organs, surrogacy, and certain forms of labor. However, beyond moral objections, these markets raise additional concerns, as said in Al Roth’s Who Gets What and Why, it’s important to remember that:
Competition can take many forms, and it isn’t easy to see who gains and who loses.
Imagine a market that permits monetary compensation for organ donation. It’s medically acceptable for a healthy individual to live with one kidney, thereby allowing them to donate the other to someone suffering from late-stage renal failure. Setting aside ethical debates, introducing financial incentives for kidney donations could lead to unintended, and perhaps undesirable, outcomes. With this model, every healthy individual possesses a valuable asset within themselves—potentially marketable. Consequently, a bank considering a loan could propose, “As part of our loan agreement, you must register as a kidney donor for monetary compensation if you default on your loan. Alternatively, we will increase your interest rate by 5%.”
This hypothetical scenario was discussed during a market design conversation over coffee, leaving me both shocked and intrigued. The mere possibility of such practices underscores the complex interplay including and beyond economic efficiency and ethical considerations in repugnant markets. It’s like a pandora box.