Gresham's Seed

There are lots of ways to clear a market. Specify two countries, D and N. In D, quality differentiation within a product category is allowed to generate price dispersion. Even still, some product grades face so little demand that wholesalers refuse suppliers offering it; the processing costs faced by the wholesaler would swamp potential returns. In N, not only can wholesalers not pay suppliers, suppliers are also faced with potential liability for the use of their product even when the product is exactly as was promised and performs exactly to expectation.

And so we get these fun bits of news. In Denmark:

Ole Schou, Cryos's director, said that there had been a surge in donations in recent years, allowing the facility to become much more picky about its donors. [They're turning down red-headed donors.] ...Cryos pays donors up to $500 (£316), and sends its semen to over 65 countries worldwide.

Meanwhile, in New Zealand:

While one of the world's largest sperm banks has reportedly rejected sperm from red haired men because of little demand, New Zealand sperm banks welcomed swimmers from most men, and were definitely not putting a ban on redheads, Dr Richard Fisher said. Fisher, who works for the country's largest fertility clinic Fertility Associates, said there had always been a shortage of sperm donors in New Zealand.

...But when it came to sperm donors in New Zealand, Fisher said recipients had "very little choice". He said fertility clinics in New Zealand found it particularly difficult to recruit sperm donors who were willing for their sperm to go to a lesbian couple or a single woman. It was easier to get men to donate sperm to heterosexual couples, but there still wasn't enough to meet demand. New Zealand sperm banks did not offer money to donors, which is one of the reasons why supply did not meet demand, Fisher said.

He said it wasn't a case of turning down donors in New Zealand that was an issue, but recruiting them in the first place. "It's almost as easy to get egg donors as it is to get sperm donors," he said. "And egg donors have to go through an in vitro fertilisation cycle, whereas men just have to donate their sperm."

... Sperm donors were required by law to be identifiable. Children who have been conceived via sperm donation could access their donor's details when they reached 18 years.

When you force donation price to zero and saddle donors with potential for resource extraction eighteen years down the line, donors are going to be less likely to provide samples to riskier bets; things clear by recipient queuing. Who might then donate? Maybe foreign tourists who are less likely to be hit up eighteen years later for college money. Maybe ginger donors who felt rejected in their home country and want to feel loved. Alas, Google tells me Denmark hasn't a team in the Rugby World Cup (and yes, I did have to check).

In the absence of red-headed Danish tourists, folks here in need would be stuck with local supply where a version of Gresham's Law will apply.

Previously:

• Price dispersion in gamete market surprisingly low, but still too high for some ethicists.
• Veil arguments and anonymous donation.