Abstract
PurposeThe purpose of this paper is to provide the foundational economics, both in theory and practice, to describe the current competitive and operational market dynamics of the blood service industry in the United States of America.Design/methodology/approachThe paper applies the dominant firm-competitive fringe model to describe how pricing is determined within the blood service industry, with particular focus on the nonprofit business model. The research also describes the role of government as one of the major determinants of pricing through regulatory demands.FindingsThe longstanding, free-market based economic foundations of the blood service industry have proven to be adequate in meeting the blood needs of the United States (US). Though there are clear market inefficiencies associated with the dominant firm model, none of the proposed solutions target the contractual and resulting pricing inefficiencies that persist because of the market structure.Originality/valueIn order to add value to the blood industry professionals, it is imperative to provide the foundational economics driving the current macro-level blood industry of the US.
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