Normally, economists expect entry to improve industry performance. The
effects of entry, however, can become perverse. Here, we examine the
causes and effects of observed entry into the transplantation industry
. Entry appears to be caused by economic rents created by the shortage
of organs resulting from the current policy proscribing payment to or
gan donors. Under this policy, entry has little effect on the number o
f transplants performed. Consequently, entry spreads available organs
among an increasing number of transplant centers, resulting in both in
creased costs and lower success rates. Thus, current policy simultaneo
usly encourages entry and perverts ifs normally salutary effects.