Supplier-Induced Demand: Some Empirical Evidence and Implications

Robert G. Evans
Additional contact information
Robert G. Evans: University of British Columbia

Chapter 10 in The Economics of Health and Medical Care, 1974, pp 162-173 from Palgrave Macmillan

Abstract: Abstract The professional relationship arises from the significant information differential between physician and patient, and permits the physician to exert direct, non-price influence on the demand for his own services. If the economic status of the physician affects the level and direction of such influence exerted, then models of the demand for care which do not include explicit consideration of supplier behavior are incompletely specified. This paper outlines the effect on demand analyses of two alternative specifications of physician behavior, and notes that each can lead to ‘perverse’ response of price to increases in supply, or of quantity demanded to price. It then examines several pieces of empirical evidence from Canada and the United States which are consistent with substantial demand influence by physicians, with responses of generated output to physician stock around 80 per cent through increases in supply of physician-initiated services. The conclusion is that policy to limit price inflation, correct ‘shortages’ or restrain unnecessary utilization cannot be based on conventional supply and demand models.

Keywords: Demand Curve; Physician Density; Physician Workload; Demand Generation; Marginal Disutility (search for similar items in EconPapers)
Date: 1974
References: Add references at CitEc
Citations: View citations in EconPapers (159)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-63660-0_10

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349636600

DOI: 10.1007/978-1-349-63660-0_10

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().