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The Pricing of Primary Care Physicians' Services: A Test of the Role of Consumer Information

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  • Mark V. Pauly
  • Mark A. Satterthwaite
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    Abstract

    This article empirically tests the theory that prices are affected by consumer information. It develops an empirical model (the increasing monopoly model) based on the notion that an increase in the number of sellers of a "reputation" good may cause price to increase because such an increase makes consumer search less efficient. The model is tested with data on the prices of primary care physicians' services in 92 SMSA's. The increasing monopoly model is found to be superior in explanatory power to a model based on the modified target income theory of physician pricing.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal Bell Journal of Economics.

    Volume (Year): 12 (1981)
    Issue (Month): 2 (Autumn)
    Pages: 488-506

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    Handle: RePEc:rje:bellje:v:12:y:1981:i:autumn:p:488-506

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    Cited by:
    1. Laurence C. Baker, 1994. "Does Competition from HMOs Affect Fee-For-Service Physicians?," NBER Working Papers 4920, National Bureau of Economic Research, Inc.
    2. Dennis W. Carlton & Jeffrey M. Perloff, 1989. "The Economics of Information," Food Marketing Policy Center Research Reports 005, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    3. E. Sam Overman & Anthony G. Cahill, 1994. "Information, market government, and health policy: A study of health data organizations in the states," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(3), pages 435-453.
    4. Perronnin, Marc, 2013. "Effet de l'assurance complémentaire santé sur les consommations médicales, entre risque moral et amélioration de l'accès aux soins," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/13659 edited by Wittwer, Jérôme, September.
    5. Dwyer, Debra Sabatini & Liu, Hong, 2013. "The impact of consumer health information on the demand for health services," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(1), pages 1-11.
    6. Vincze, János, 2010. "Miért és mitől védjük a fogyasztókat?. Aszimmetrikus információ és/vagy korlátozott racionalitás
      [Asymmetric information and/or bounded rationality: why are consumers protected and from
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 725-752.
    7. Stange, Kevin, 2014. "How does provider supply and regulation influence health care markets? Evidence from nurse practitioners and physician assistants," Journal of Health Economics, Elsevier, vol. 33(C), pages 1-27.
    8. Alvin Headen, 1987. "Price discrimination in physician services markets based on race: New test of an old implicit hypothesis," The Review of Black Political Economy, Springer, vol. 15(4), pages 5-20, March.
    9. Philippe Batifoulier & Nicolas Da Silva, 2014. "The economic behaviour of doctors: medical altruism without an ethic?," EconomiX Working Papers 2014-9, University of Paris West - Nanterre la Défense, EconomiX.
    10. Stephen T. Parente & David Salkever & Joan DaVanzo, 2003. "The Role of Consumer Knowledge of Insurance Benefits in the Demand for Preventative Health," NBER Working Papers 9912, National Bureau of Economic Research, Inc.

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