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Competition-driven physician-induced demand

Kei Ikegami, Ken Onishi and Naoki Wakamori

Journal of Health Economics, 2021, vol. 79, issue C

Abstract: This paper empirically investigates how competition affects physicians’ opportunistic behavior in the context of the utilization of MRI scanners. We examine micro-panel data on Japanese hospitals, where we observe how physicians change their usage of MRI scanners in response to MRI adoption by nearby hospitals. We identify competition-driven physician-induced demand: Hospitals lose patients because of MRI adoption by nearby hospitals, and, to compensate for this loss, physicians perform more MRI scans per patient. Although competition may benefit consumers through better access to MRI scanners, it also causes additional physician-induced demand.

Keywords: Physician-induced demand; Hospital competition; Business-stealing effects; Externalities (search for similar items in EconPapers)
JEL-codes: I11 I12 I19 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jhealeco.2021.102488

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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