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Moonlighting: Public Service and Private Practice

Gary Biglaiser () and Ching-to Ma ()
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Gary Biglaiser: Department of Economics, University of North Carolina

No WP2006-015, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: We study dual job incentives with a focus on public-service physicians referring patients to their private practices. We call this moonlighting. Not all physicians moonlight; we introduce a group of dedicated doctors who in the base models behave sincerely in the public system. Allowing moonlighting always enhances aggregate consumer welfare. The equilibrium care quality in the public system may increase or decrease; in the former situation, the policy allowing moonlighting improves each consumer’s expected utility. Unregulated moonlighting may be detrimental to consumer welfare when it leads to adverse behavioral reactions such as moonlighters shirking more in the public system, and dedicated doctors abandoning their sincere behavior. Price regulation in the private market tradeoffs the efficiency gain from moonlighting against the loss due to adverse behavior in the public system and improve consumer welfare.

New Economics Papers: this item is included in nep-ecm
Date: 2006-03
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