Volume 18, Number 4 (Fall) 1983
Margolis, Stephen E. 1983. "The Pricing of Physicians' Services." Journal of Human Resources 18(4):592-608.
This paper provides a model of the pricing of a physician's output. Each medical specialty behaves as a cartel, choosing prices which maximize profits for a representative practitioner. Two assumptions distinguish the model from previous work, and generate key results: (I) Within specialties, all activities have the same price per unit of physician's time. (2) For physicians, there are no artificial barriers to entry into specialty practice. The model implies a "surplus" of surgeons, an outcome which has been observed in the medical literature. Additional empirical tests are provided.
The author is Assistant Professor of Economics, North Carolina State University.
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