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

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Author Info
Mark V. Pauly
Mark A. Satterthwaite
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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Publisher 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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  1. E. Delattre & B. Dormont, 2000. "Testing for supplier-induced demand behavior : A panel data study on French physicians," THEMA Working Papers 2000-42, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
  2. Jostein Grytten & Rune Sørensen, 2000. "Competition and dental services," Health Economics, John Wiley & Sons, Ltd., vol. 9(5), pages 447-461.
  3. Granlund, David & Rudholm, Niklas, 2007. "Consumer Information and Pharmaceutical Prices: Theory and Evidence," HUI Working Papers 8, The Swedish Retail Institute (HUI). [Downloadable!]
  4. Eric Delattre & Brigitte Dormont, 2003. "Fixed fees and physician-induced demand: A panel data study on French physicians," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 741-754. [Downloadable!]
  5. Martin Gaynor & Solomon Polachek, 1994. "Measuring Ignorance in the Market: A New Method with an Application to Physician Services," NBER Working Papers 3430, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Jeff Richardson & Stuart Peacock & Duncan Mortimer, 2004. "Does an increase in the doctor supply reduce medical fees? An econometric analysis of medical fees across Australia," Centre for Health Economics Working Papers 145/04, Monash University, Centre for Health Economics. [Downloadable!]
  7. Jostein Grytten & Irene Skau, 2009. "Specialization and competition in dental health services," Health Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 457-466. [Downloadable!]
  8. Granlund, David, 2007. "Economic Policy in Health Care: Sickness Absence and Pharmaceutical Cost," UmeÃ¥ Economic Studies 710, Umeå University, Department of Economics. [Downloadable!]
  9. M. Kate Bundorf & Laurence Baker & Sara Singer & Todd Wagner, 2004. "Consumer Demand for Health Information on the Internet," NBER Working Papers 10386, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Laurence C. Baker, 1994. "Does Competition from HMOs Affect Fee-For-Service Physicians?," NBER Working Papers 4920, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Carlton, Dennis W. & Perloff, Jeffrey M., 1989. "The Economics of Information," Research Reports 25156, University of Connecticut, Food Marketing Policy Center. [Downloadable!]
  12. Granlund, David & Rudholm, Niklas, 2007. "Consumer Information and Pharmaceutical Prices: Theory and Evidence," UmeÃ¥ Economic Studies 709, Umeå University, Department of Economics. [Downloadable!]
  13. Paulo Guimaraes & Richard Lindrooth, 2005. "Dirichlet-Multinomial Regression," Econometrics 0509001, EconWPA. [Downloadable!]
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