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Are physician fees responsive to competition?

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  • Choné, P.
  • Coudin, É.
  • Pla, A.

Abstract

We assess the extent to which specialist doctors respond to local competition when setting prices (including extra-billings) in a fee-for-service system. We use an exhaustive panel data set to estimate physician reaction functions, exploiting exogenous changes in medical density and labor supply to identify the effects of local market structure and competitors' prices. We find that fees are strategic complements and decrease with physician density. Our results are consistent with a static competition model where patient choice is based on distance, price and observable physician characteristics and doctors have standard consumption-leisure preferences. Finally, we examine how the presence of physicians subject to full price regulation affects strategic interactions.

Suggested Citation

  • Choné, P. & Coudin, É. & Pla, A., 2014. "Are physician fees responsive to competition?," Health, Econometrics and Data Group (HEDG) Working Papers 14/20, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:14/20
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    References listed on IDEAS

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    6. Isabelle Clerc & Olivier L’Haridon & Alain Paraponaris & Camelia Protopopescu & Bruno Ventelou, 2012. "Fee-for-service payments and consultation length in general practice: a work--leisure trade-off model for French GPs," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3323-3337, September.
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    Cited by:

    1. Francesco Longo & Luigi Siciliani & Hugh Gravelle & Rita Santos, 2017. "Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 38-62, September.
    2. Siciliani, Luigi & Chalkley, Martin & Gravelle, Hugh, 2017. "Policies towards hospital and GP competition in five European countries," Health Policy, Elsevier, vol. 121(2), pages 103-110.
    3. Francesco Longo & Luigi Siciliani & Hugh Gravelle & Rita Santos, 2017. "Do hospitals respond to rivals’ quality and efficiency? a spatial econometrics approach," Working Papers 144cherp, Centre for Health Economics, University of York.
    4. Zhang, Yi & Zhou, Zhongliang & Si, Yafei, 2019. "When more is less: What explains the overuse of health care services in China?," Social Science & Medicine, Elsevier, vol. 232(C), pages 17-24.
    5. Choné, Philippe, 2017. "Competition policy for health care provision in France," Health Policy, Elsevier, vol. 121(2), pages 111-118.

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    More about this item

    Keywords

    fee-for-service; local competition; price competition; physicians' labor supply; extra billings;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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