Market segmentation in child adoption

The system for the adoption of children is not working well. The dysfunction of the adoption system manifests itself in an excess demand for healthy white babies and excess supply of older children, minority children, or those with disabilities. A market solution can increase the number of adoptions for older children, minority children or children with disabilities. Recognizing the heterogeneity of children and taking account of those differences will yield price differentiation in segmented markets. Such differentiation is especially important in the market for adopted children where the lifetime consequences of a poor match can be severe; more information about child attributes can only improve child-adopter matches. Revenues from the sale of adoption rights for highly demanded children could subsidize the adoption of the less desired children. The time to adoption will decrease and more of the less desired children will be adopted; the sum of consumer (adoptive parents) plus producer (biological mothers or the adoption agencies) surplus will rise and eliminate sub rosa markets for the more desired children.