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Repugnant transactions refer to transactions that are socially resisted, and some economists argue that repugnant transactions can constrain or shape the market and market design. 

repugnant transaction

slave trade, selling organ for transplantation and indentured servitude. What makes a transaction “repugnant” is dependent on laws and the shared perception of society. For example, based on California state laws, the consumption of horse meat is legally discouraged and the selling of horse meat is considered as a repugnant transaction. However, horse meat is widely consumed in the EU and therefore not considered as a repugnant transaction. 

Example

Using your understanding of how social values can interact with market mechanisms, analyze why this proposed prediction market is facing public opposition despite its stated goal of efficiently aggregating information. What specific features of the transactions make them objectionable to many people?

Market Design and Social Norms

Some economists argue that creating a legal, regulated market for human kidneys would increase the supply available for transplantation and save lives. However, such a market is banned in most countries due to strong social and ethical objections. Evaluate the economic arguments in favor of such a market against the societal concerns that lead to its prohibition. In your evaluation, consider the potential effects on efficiency, equity, and the nature of the good being traded.

Evaluating a Controversial Market

A company proposes creating a regulated online marketplace where people in dire financial situations can solicit and receive large, no-strings-attached cash gifts from anonymous wealthy donors. Despite being a voluntary exchange that could benefit both parties, there is significant public outcry against the idea, with many calling it 'indecent'. Which of the following best explains this opposition through the lens of a 'repugnant transaction'?

Consider a hypothetical, perfectly legal, and voluntary market where citizens could sell their right to vote in a national election to the highest bidder. From a purely transactional viewpoint, this allows someone who values their vote less to gain money, and someone who values it more to express their preference. Despite this, such a market would likely face widespread social opposition. Explain the core reasons why this transaction would be considered socially unacceptable, moving beyond the simple argument of economic efficiency.

Analyzing Social Resistance to Markets

Match each example of a transaction that is often considered socially unacceptable with the primary ethical objection that drives this view.

In the context of market design, a transaction is considered 'repugnant' primarily because it is illegal or causes direct, quantifiable harm to the participating parties, rather than due to broader social or ethical objections.

Describe a hypothetical market transaction that, while voluntary between the parties involved, would likely face strong social opposition. Explain what specific social or ethical concerns would cause people to object to this transaction, even if it were legal and economically efficient.

Identifying Socially Resisted Transactions

Based on the provided scenario, design a *modified* system that uses market-like incentives to increase the supply of kidneys while addressing the ethical concerns that make a simple cash market 'repugnant'. Describe your proposed system and explain how it specifically mitigates the key social objections.

Designing a Market for a Sensitive Good

A government is considering several proposals to create new markets. Which of the following proposals, if met with strong public opposition, would best be characterized as a 'repugnant transaction'?

Based on the case study, evaluate the decision to cancel this proposed market. In your evaluation, weigh the market's intended utilitarian benefits (e.g., improved intelligence) against the societal objections that framed it as a repugnant transaction. Justify your position.

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