Alvin E. Roth (2014) - Repugnant Markets and Prohibited Transactions

Alvin E. Roth (2014)

Repugnant Markets and Prohibited Transactions

Alvin E. Roth (2014)

Repugnant Markets and Prohibited Transactions

Abstract

I’ll speak about “repugnant transactions,” which are transactions that some people want to do, and other people don’t want them to do. That turns out to be a very broad class of transactions that include some things economists understand well (e.g. opposition to transactions with clear negative externalities to third parties), and other things we understand much less well (e.g. opposition to same sex marriage). I began to pay attention to repugnant transactions in connection with my work on kidney exchange: while no one opposes kidney transplantation, including living kidney donation, almost every country in the world has laws against paying for kidneys. The only exception I know of is the Islamic Republic of Iran, where kidneys can legally be bought and sold, although of course there are illegal black markets in many places. (It turns out that in Germany, even kidney exchange, of the kind my colleagues and I have helped establish in the U.S. and elsewhere, is illegal.)
I’ll touch on a wide range of repugnant transactions, which have changed over time (e.g. interest on loans, markets for slaves) and are different in different places. I’ll argue that these are important phenomena that we economists would do well to understand better.


Suggested readings:
• Roth, Alvin E. "Repugnance as a Constraint on Markets", Journal of Economic Perspectives, 21:3, Summer, 2007, pp. 37-58.
• You can browse the many blog posts I’ve written about repugnant transactions at http://marketdesigner.blogspot.com/search/label/repugnance

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