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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. 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.
    2. Ankit Kumar & Grégoire de Lagasnerie & Frederica Maiorano & Alessia Forti, 2014. "Pricing and competition in Specialist Medical Services: An Overview for South Africa," OECD Health Working Papers 70, OECD Publishing.
    3. 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).
    4. 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.
    5. 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.
    6. Hiroyuki Kasahara & Katsumi Shimotsu, 2012. "Sequential Estimation of Structural Models With a Fixed Point Constraint," Econometrica, Econometric Society, vol. 80(5), pages 2303-2319, September.
    7. 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.
    8. 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).
    9. 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).
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    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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