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Provider Competition in a Dynamic Setting

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Author Info

  • Marie Allard

    () (IEA, HEC Montréal)

  • Pierre Thomas Léger

    () (IEA, HEC Montréal)

  • Lise Rochaix

Abstract

In this paper, we examine provider and patient behaviour where effort is non-contractible and where competition between providers is modeled in an explicit way. More specifically, we construct a model where physicians repeatedly compete for patients and where patients’ outside options are solved for in equilibrium. In our model, physicians are characterized by an individual-specific ethical constraint which allows for unobserved heterogeneity in the physicians market. By doing so, we introduce uncertainty in the patient’s likely treatment if he were in fact to leave his current physician to seek care elsewhere. We find that competition between providers may serve as an important incentive for physicians in treating their patients with desired levels of care.

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Bibliographic Info

Paper provided by HEC Montréal, Institut d'économie appliquée in its series Cahiers de recherche with number 04-07.

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Length: 32 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:iea:carech:0407

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Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
Phone: (514) 340-6463
Fax: (514) 340-6469
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Web page: http://www.hec.ca/iea/
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Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
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Related research

Keywords: Physician Payment Mechanisms; Physician heterogeneity; Competition; Information Asymmetry; Insurance.;

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References

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  1. Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
  2. Martin Gaynor & William B. Vogt, 1999. "Antitrust and Competition in Health Care Markets," NBER Working Papers 7112, National Bureau of Economic Research, Inc.
  3. Rochaix, Lise, 1989. "Information asymmetry and search in the market for physicians' services," Journal of Health Economics, Elsevier, vol. 8(1), pages 53-84, March.
  4. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
  5. Patricia M. Danzon, 1991. "Liability for Medical Malpractice," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 51-69, Summer.
  6. Dranove, David, 1988. "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 281-98, April.
  7. Ma, Ching-to Albert & McGuire, Thomas G, 1997. "Optimal Health Insurance and Provider Payment," American Economic Review, American Economic Association, vol. 87(4), pages 685-704, September.
  8. Gal-Or, Esther, 1999. "Optimal Reimbursement and Malpractice Sharing Rules in Health Care Markets," Journal of Regulatory Economics, Springer, vol. 16(3), pages 237-65, November.
  9. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
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Cited by:
  1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
  2. Martin Gaynor, 2006. "What Do We Know About Competition and Quality in Health Care Markets?," NBER Working Papers 12301, National Bureau of Economic Research, Inc.

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