Designing a Mechanism for Kidney Exchange in Iran

One of the most critical market duties is to ensure coordination between the supplier and demander. When the market fails to fulfill this duty efficiently, it either does not form or fail and disintegrate. This is because the number of market participants is either too large or too small, and/or the market experiences conditions where the participants scarcely give voice to their priorities with ease and confidence. Economists contend that the fundamental challenge in market design is that we sufficiently understand complex markets and develop our abilities to the point where we can reconstruct or redesign them upon their failure and/or use market-like mechanisms. When the process of price adjustment is slowly at work, economic factors tend to select what they want in the price they observe. Still, many markets are by far beyond this simple economic rule. In such markets, we may not readily obtain what we need even when we can afford it. In other words, while to want to and to be able to (to want a product and to be able to pay for it) generate demand in common markets, these two factors do not necessarily present us as customers in the complex markets since commodities are offered with variable qualities so that it is impossible to form a market for them. Some markets are so complex that people cannot select what they need despite their willingness and ability to pay for it. That is, price mechanism and automatic adjustment do not provide the market with balance although this does not imply the impossibility of market formation. . Market design theory and matching theory seek to provide a stage where suppliers and demanders can meet without using the traditional market mechanism (price mechanism). In this theory, price mechanism does not offer solution to the problem of resource allocation. Rather, allocation is based on suppliers and demanders’ conditions. Based on the proposed algorithm, ranked preferences replace and act as price system. One of the most important applications of market design in the past decade has been to the kidney and body parts market. for the purposes of market design, one should employ an algorithm that can overcome the causes of market failure such as returns to scale, externalities, uncertainty, thinness, congestion and insecurity to demonstrate preferences.These factors affect both market failure and lack of market formation.
The present study aimed to address the problem of kidney market and provide a solution to the problem. Dispersed market participants, limited number of suppliers and demanders, and poor supplier-demander relationshipmay lead to market (kidney exchange mechanism) failure or impede market formation.
In order  to resolve this deficiencies we should design a mechanism for overcoming the market failures in order to reach to  an efficient and stable allocation. Kidney market is a true example of this type of markets. Therefore, it is  suggested to create a clearing room in which the information of kidney donors and patients be recorded and after processing  this information and determine patient preferences, the matching algorithm could match the compatible couples(donors and patients)‏ and kidney exchange can be facilitated. The present study was carried out in Hamedan Province in 2016 using matching theory which is a subset of market design and mechanism design. To this end, the information for forty‏ people , twenty of them patients and twenty others Kidney donator were recorded in the clearing room. Then, after blood and tissues tests and determining patient preferences and forming matching algorithms, seventeen of twenty patients could receive kidney transplant. However, without using this mechanisms only nine patient could have received transplan, Also using this mechanism will result at least 163817796 Rials per patient.