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Competition, Prices and Quality in the Market for Physician Consultations


  • Hugh Gravelle

    (Centre for Health Economics, The University of York)

  • Anthony Scott

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Peter Sivey

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Jongsay Yong

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)


Prices for consultations with General Practitioners (GPs) in Australia are unregulated, and patients pay the difference between the price set by the GP and a fixed reimbursement from the national tax-funded Medicare insurance scheme. We construct a Vickrey-Salop model of GP price and quality competition and test its predictions using a dataset with individual GP level data on prices, the proportion of patients who are charged no out-of-pocket fee, average consultation length, and characteristics of the GPs, their practices and their local areas. We measure the competition to which the GP is exposed by the distance to other GPs and allow for the endogeneity of GP location decisions with measures of area characteristics and area fixed-effects. Within areas, GPs with more distant competitors charge higher prices and a smaller proportion of their patients make no out-of-pocket payment. GPs with more distant competitors also have shorter consultations, though the effect is small and statistically insignificant.

Suggested Citation

  • Hugh Gravelle & Anthony Scott & Peter Sivey & Jongsay Yong, 2013. "Competition, Prices and Quality in the Market for Physician Consultations," Melbourne Institute Working Paper Series wp2013n23, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2013n23

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    References listed on IDEAS

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    Cited by:

    1. Kurt R. Brekke & Tor Helge Holmäs & Karin Monstad & Odd Rune Straume, 2017. "Competition and physician behaviour: Does the competitive environment affect the propensity to issue sickness certificates?," NIPE Working Papers 05/2017, NIPE - Universidade do Minho.
    2. Brekke, Kurt R. & Holmås, Tor Helge & Monstad, Karin & Straume, Odd Rune, 2017. "Competition and physician behaviour: Does the competitive environment the propensity to issue sickness certificates?," Discussion Paper Series in Economics 3/2017, Norwegian School of Economics, Department of Economics.
    3. repec:eee:regeco:v:64:y:2017:i:c:p:117-136 is not listed on IDEAS
    4. Meliyanni Johar & Glenn Jones & Elizabeth Savage, 2014. "What Explains The Quality And Price Of Gp Services? An Investigation Using Linked Survey And Administrative Data," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1115-1133, September.
    5. Benjamin Montmartin & Mathieu Escot, 2017. "Local Competition and Physicians’ Pricing Decisions: New Evidence from France," GREDEG Working Papers 2017-31, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    6. Dieter Pennerstorfer, 2014. "Price and Quality Competition in Spatial Markets. The Case of Camping Sites," WIFO Working Papers 466, WIFO.
    7. Anthony Scott & Peter Sivey, 2017. "Motivation and Competition in Health Care," Melbourne Institute Working Paper Series wp2017n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Bisceglia, Michele & Cellini, Roberto & Grilli, Luca, 2017. "Regional regulators in healthcare service under quality competition: A game theoretical model," MPRA Paper 80507, University Library of Munich, Germany.
    9. Dietrichson, Jens & Ellegård, Lina Maria & Kjellsson, Gustav, 2016. "Effects of Increased Competition on Quality of Primary Care in Sweden," Working Papers 2016:36, Lund University, Department of Economics.
    10. 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.

    More about this item


    Competition; prices; quality; doctors;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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