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A shirking theory of referrals

  • Damien S.Eldridge


    (School Economics, La Trobe University)

The health care industry in some countries displays a gated structure. Rather than approaching a specialist directly, a patient will first seek a referral from a general practitioner. We provide one possible explanation for such an industry structure. If the outcome of treatment depends on the effort exerted by the treating specialist, then a market failure might occur. By aggregating many patients, general practitioners can sometimes create an artificial long- run relationship between a patient and a specialist that otherwise would have a short-run relationship. Such an artificial long-run relationship reduces the incidence of shirking on the part of the specialist.

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Paper provided by School of Economics, La Trobe University in its series Working Papers with number 2013.01.

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Length: 31 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:trb:wpaper:2013.01
Note: ISSN-1837-2198
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