You are sitting on an advisory board deciding whether to legalize the market in which people are free to buy and sell human kidneys.
- Draw a supply-and-demand diagram to illustrate the organ shortage problem. Show how legalizing the kidney market could alleviate the shortage problem.
- Provide an externality argument that it may not be socially optimal to legalize the kidney market. Illustrate your answer with the supply-and-demand diagram and support it with examples or hypothetical scenarios.