Volume 9, Number 1 (Winter) 1974
Masson, Robert T., and S. Wu. 1974. "Price Discrimination for Physicians' Services." Journal of Human Resources 9(1):63-79.
This paper develops an alternative model for the discriminatory pricing behavior of physicians. By introducing search cost explicitly, it generates a result that price discrimination will be practiced by all physicians even if the elasticity of market demand is less than one and all or most of the physicians are profit-maximizers. The proposed model also explains the history and the recent trend of pricing behavior in medicine and may further explain some of the political actions of the American Medical Association.
The authors are from Northwestern University and the University of Iowa, respectively. The authors would like to thank their conference discussant, George Hay of Yale University, and Richard B. Heflebower of Northwestern University (emeritus) for helpful comments on an earlier draft of this paper.
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