Publication Date

April 2019


John Bonin, Christiaan Hogendorn


Economics (ECON)


English (United States)


Today, the blood and sperm donation markets are global, multi-billion dollar industries. Despite the altruistic rhetoric that commonly surrounds the donation of body fluids, donors are regularly paid for their “gifts,” and recipients can face remarkably high acquisition costs. For body fluid collection agencies, or ‘banks,’ which serve as intermediaries between donors and recipients, the markets for blood and sperm are quite robust. However, starkly different market outcomes have been seen to occur between the two industries and between countries. In this thesis, I employ an industrial organization approach to examine the strategic interaction between fluid collection firms and explore the efficiency of divergent regulatory regimes. I use the model of the blood donation industry presented by Nagurney and Dutta (2018) as a baseline framework for fluid donation, and sharpen new models for both industries based on my research of both industries. Through investigation of the blood and sperm markets, average donor characteristics, and varying regulatory approaches (using the United States and Canada as illustrative examples), I am able to map the effects of several key parameters on industry effectiveness. My results show that nonprofit firms in competition should provide super-optimal service levels to fluid donors in equilibrium. I also find that as donors become more intense in their preferences toward incentives, the “business stealing” effect that arises from competition between firms can mitigated by “product differentiation” (appealing to different donor niches). However, donor neutrality can benefit the market in alternative ways. These findings inform the policy recommendations that the United States retain its competitive market structure and continue to provide incentives for blood donation, but shift to a single-firm market which continues to provide incentives for sperm donation.



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