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Specialization, Option Demand, and the Pricing of Medical Specialists

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  • David Dranove
  • William D. White

Abstract

This paper discusses the supplier power of medical specialists. We argue that a combination of factors, including the structure of health care delivery, reimbursement systems, the presence of option demand, and high consumer switching costs, create circumstances in which medical specialists may be able to exercise significant seller power. We explore the implications of this for the pricing and organization of medical care. Copyright 1996 The Massachusetts Institute of Technology.

Suggested Citation

  • David Dranove & William D. White, 1996. "Specialization, Option Demand, and the Pricing of Medical Specialists," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(2), pages 277-306, June.
  • Handle: RePEc:bla:jemstr:v:5:y:1996:i:2:p:277-306
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    Cited by:

    1. Dunn, Abe, 2010. "The value of coverage in the medicare advantage insurance market," Journal of Health Economics, Elsevier, vol. 29(6), pages 839-855, December.
    2. Martin Gaynor & Deborah Haas-Wilson, 1999. "Change, Consolidation, and Competition in Health Care Markets," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 141-164, Winter.
    3. Gilad Sorek, 2015. "Health Insurance and Competition in Health Care Markets," Auburn Economics Working Paper Series auwp2015-03, Department of Economics, Auburn University.
    4. Gal-Or, Esther, 1999. "The profitability of vertical mergers between hospitals and physician practices," Journal of Health Economics, Elsevier, vol. 18(5), pages 621-652, October.

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