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Information asymmetries and supplier induced demand (an economic study for the french market)

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  • Sophie Bejean

    (LATEC - Laboratoire d'Analyse et de Techniques Economiques [URA 342] - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The supplier induced demand hypothesis relies on the existence of information asymmetry between the physician and his patient. This asymmetry confers a discretionary power on practitioners who are using it in order to satisfy their own interest. The inducement effect is identified and distinguished from the other consequences of information asymmetries in the health care system, i.e. moral hazard and adverse selection. A controversy is generated by the induced demand hypothesis which constitutes a challenge to the assumption of the independence of supply and demand and, therefore, contradicts standard neoclassical predictions. The role of empirical studies is important in this respect. An empirical test of the inducement hypothesis is set out based on French general practitioners data. The results of this study are statistically robust and corroborate the induced demand hypothesis.

Suggested Citation

  • Sophie Bejean, 1990. "Information asymmetries and supplier induced demand (an economic study for the french market)," Working Papers hal-01538707, HAL.
    • Handle: RePEc:hal:wpaper:hal-01538707
    Note: View the original document on HAL open archive server: https://hal.science/hal-01538707v1
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    References listed on IDEAS

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    1. Robert G. Evans, 1974. "Supplier-Induced Demand: Some Empirical Evidence and Implications," International Economic Association Series, in: Mark Perlman (ed.), The Economics of Health and Medical Care, chapter 10, pages 162-173, Palgrave Macmillan.
    2. Reinhardt, Uwe E., 1985. "The theory of physician-induced demand reflections after a decade," Journal of Health Economics, Elsevier, vol. 4(2), pages 187-193, June.
    3. Sloan, Frank A & Lorant, John H, 1977. "The Role of Waiting Time: Evidence from Physicians' Practices," The Journal of Business, University of Chicago Press, vol. 50(4), pages 486-507, October.
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