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Physician reimbursement, time-consistency and the quality of care
[Ärztevergütung, Zeitkonsistenz und die Qualität medizinischer Leistungen]

  • Nuscheler, Robert

We use a model of horizontal and vertical differentiation to study physicians’ incentives to provide quality in the physician-patient relationship under price regulation. If the price is the only regulatory variable, the social planner cannot implement the first-best policy. Moreover, the second-best policy is time inconsistent. Excess entry and firstbest efficient total quality provision is observed in the game without commitment. Allowing physicians to compete in prices does not solve the commitment problem since the competitive solution coincides with the time consistent outcome. In the median voter equilibrium the time consistency problem is more severe.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number FS IV 02-16.

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Date of creation: 2002
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Handle: RePEc:zbw:wzbmpg:fsiv0216
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  1. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "Entry (and exit) in a differentiated industry," CORE Discussion Papers RP -400, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Neven, D. & Thisse, J-F., 1989. "On Quality And Variety Competition," CORE Discussion Papers 1989020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
  4. Gravelle, Hugh, 1999. "Capitation contracts: access and quality," Journal of Health Economics, Elsevier, vol. 18(3), pages 315-340, June.
  5. Franz Benstetter & Achim Wambach, 2001. "Strategic Interaction in the Market for Physician Services: The Treadmill Effect in a Fixed Budget System," CESifo Working Paper Series 427, CESifo Group Munich.
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