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How does service price influence patients’ decisions? An examination of the free-market pricing mechanism in online health communities

Author

Listed:
  • Hong Wu

    (Huazhong University of Science and Technology)

  • Zhaohua Deng

    (Huazhong University of Science and Technology)

  • Bin Wang

    (University of Texas Rio Grande Valley)

  • Sumeet Gupta

    (Indian Institute of Management Raipur)

Abstract

In online health communities (OHCs) in China, physicians can provide online diagnostic services and use the free-market pricing mechanism to price their service so as to encourage quality service. By collecting publicly available patient behavior data for three months for 7726 physicians (with 154,512 records) on an OHC in China, we use the negative binomial model and ordinary least square to empirically investigate the influences of service price on a patient’s sequent decisions including search, purchase, and review based on the medical resource scarcity and social exchange frameworks, and examine how disease risk moderates the magnitude of these effects. Our results show that service price is positively related to patients’ information search and review quality, but negatively related to their purchase and review decisions. In addition, the impacts of service price differ for severe versus mild diseases. Our research contributes to a better understanding of the free-market pricing mechanism on OHCs and provides practical implications for a physician’s pricing strategy in the online environment.

Suggested Citation

  • Hong Wu & Zhaohua Deng & Bin Wang & Sumeet Gupta, 2021. "How does service price influence patients’ decisions? An examination of the free-market pricing mechanism in online health communities," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 877-893, December.
    • Handle: RePEc:spr:elmark:v:31:y:2021:i:4:d:10.1007_s12525-020-00453-0
    DOI: 10.1007/s12525-020-00453-0
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    References listed on IDEAS

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    Cited by:

    1. Edith Maier & Ulrich Reimer & Nilmini Wickramasinghe, 2021. "Digital healthcare services," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 743-746, December.

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    More about this item

    Keywords

    Online health communities; Pricing; Search; purchase and review decision; Disease risk; Social exchange;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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