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Moonlighting: Public Service and Private Practice

Author

Listed:
  • Gary Biglaiser

    (Department of Economics, University of North Carolina)

  • Ching-to Albert Ma

    (Department of Economics, Boston University)

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.

Suggested Citation

  • Gary Biglaiser & Ching-to Albert Ma, 2006. "Moonlighting: Public Service and Private Practice," Boston University - Department of Economics - Working Papers Series WP2006-015, Boston University - Department of Economics.
    • Handle: RePEc:bos:wpaper:wp2006-015
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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