Solving Shortage in a Priceless Market: Insights from Blood Donation

39 Pages Posted: 6 Jul 2015

See all articles by Tianshu Sun

Tianshu Sun

University of Southern California - Marshall School of Business

Susan F. Lu

Purdue University - Krannert School of Management

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2015

Abstract

Shortage is common in many markets, such as those for human organs or blood, but the problem is often difficult to solve through price adjustment, given safety and ethical concerns. In this paper, we investigate whether market designers can use non-price methods to address shortage. Specifically, we study two methods that are used to alleviate shortage in the market for human blood. The first method is informing existing donors of a current shortage via a mobile message and encouraging them to donate voluntarily. The second method is asking the patient’s family or friends to donate in a family replacement (FR) program at the time of shortage. We are interested in both the short-run and long-run effects of these methods on blood supply. Using 447,357 individual donation records across 8 years from a large Chinese blood bank, we show that both methods are effective in addressing blood shortage in the short run but have different implications for total blood supply in the long run. Specifically, we find that a shortage message leads to significantly more donations among existing donors within the first six months but has no effect afterwards. In comparison, a family replacement program has a small positive effect in encouraging existing donors (who donated before the FR) to donate more blood voluntarily after their FR donation, but discourages no-history donors (whose first donation is the FR) from donating in the long run. We compare the effect and efficiency of these methods and discuss their applications under different scenarios to alleviate shortage.

Suggested Citation

Sun, Tianshu and Lu, Susan Feng and Jin, Ginger Zhe, Solving Shortage in a Priceless Market: Insights from Blood Donation (July 2015). NBER Working Paper No. w21312. Available at SSRN: https://ssrn.com/abstract=2626986

Tianshu Sun (Contact Author)

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Bridge Hall 310B
Los Angeles, CA 90089
United States

Susan Feng Lu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

HOME PAGE: http://https://sites.google.com/site/susanluhome/home

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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