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Does the Provision of Physician Services Respond to Competition?

Author

Listed:
  • Philippe CHONÉ

    (Centre for Research in Economics and Statistics (CREST).)

  • Elise COUDIN

    (Centre for Research in Economics and Statistics and Institut National de la Statistique et des Etudes Economiques (INSEE).)

  • Anne PLA

    (Ministry for Solidarity and Health, Direction de la Recherche, des Etudes, de l’Evaluation et des Statistiques.)

Abstract
We assess the extent to which specialist physicians respond to local competition when deciding how much services to provide under a fee-for-service payment system. We use an exhaustive administrative panel data set of French physicians, and account for the dual nature of the regulatory environment, with part of the physicians being subject to price regulation. The activity of fee-regulated physicians depends only on their individual preferences, and is not affected by changes in their demand or competitive environment. By contrast, the prices charged by free-billing physicians decrease and their activity increases with physician density. Reaction functions are upward-slopping, with the quantities of services provided being strategic complements. Our findings are consistent with a static oligopoly model where the consumption-leisure preferences of doctors exhibit strong income effects.

Suggested Citation

  • Philippe CHONÉ & Elise COUDIN & Anne PLA, 2019. "Does the Provision of Physician Services Respond to Competition?," Working Papers 2019-20, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2019-20
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    File URL: http://crest.science/RePEc/wpstorage/2019-20.pdf
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    References listed on IDEAS

    as
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    2. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
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    Citations

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    Cited by:

    1. Benjamin Montmartin & Marcos Herrera-Gomez, 2022. "Imitative Pricing: The Importance of Neighborhood Effects in Physicians' Consultation Prices," GREDEG Working Papers 2022-02, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    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).

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    More about this item

    Keywords

    Fee-for-service payment; physician labor supply; income effects; spatial competition.;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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