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Competition, Conformism and the Voluntary Adoption of Policies Designed to Freeze Prices

Author

Listed:
  • Mathieu Lambotte

    (Université de Rennes, CNRS, CREM, France)

  • Benjamin Montmartin

    (SKEMA Business School, Université Côte d'Azur (GREDEG))

Abstract

This paper proposes a structural approach to examine voluntary participation in a pricing scheme aimed at freezing prices, focusing on self-employed professions. We develop a binary choice model under incomplete information that captures two distinct micro-founded interaction mechanisms: spatial competition and conformity to social norms. We apply our game-theoretic framework to analyze the adoption of a novelpricing scheme offered to French private physicians, designed to freeze fees while compensating them through economic benefits. Our analysis leverages a unique geolocalized dataset covering the entire population of pediatricians, gynecologists, and ophthalmologists. We find compelling evidence of a significant preference for conformity, whereas competitive interactions appear to play a negligible role in physicians' decision-making. These findings offer a strong rationale for the observed low adoption rate of this pricing regulation policy.

Suggested Citation

  • Mathieu Lambotte & Benjamin Montmartin, 2025. "Competition, Conformism and the Voluntary Adoption of Policies Designed to Freeze Prices," GREDEG Working Papers 2025-17, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Jul 2025.
    • Handle: RePEc:gre:wpaper:2025-17
    as

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    File URL: http://195.220.190.85/GREDEG-WP-2025-17.pdf
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    References listed on IDEAS

    as
    1. Diane Alexander, 2020. "How Do Doctors Respond to Incentives? Unintended Consequences of Paying Doctors to Reduce Costs," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4046-4096.
    2. Montmartin, Benjamin & Herrera-Gómez, Marcos, 2023. "Spatial dependence in physicians’ prices and additional fees: Evidence from France," Journal of Health Economics, Elsevier, vol. 88(C).
    3. Diane Alexander & Molly Schnell, 2024. "The Impacts of Physician Payments on Patient Access, Use, and Health," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 142-177, July.
    4. Billand, Pascal & Bravard, Christophe & Joshi, Sumit & Mahmud, Ahmed Saber & Sarangi, Sudipta, 2023. "A model of the formation of multilayer networks," Journal of Economic Theory, Elsevier, vol. 213(C).
    5. Lung-fei Lee & Ji Li & Xu Lin, 2014. "Binary Choice Models with Social Network under Heterogeneous Rational Expectations," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 402-417, July.
    6. Lin, Zhongjian & Hu, Yingyao, 2024. "Binary choice with misclassification and social interactions, with an application to peer effects in attitude," Journal of Econometrics, Elsevier, vol. 238(1).
    7. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    8. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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