An Alternative Perspective On Information Asymmetry; Implications For Consumer Authority In Physician Services Markets

This paper looks at the impact of patient knowledge on utilization and quality in physician services markets, developing a theoretical framework based on an alternative to the “market failure” perspective first proposed by Arrow (1963). Specifically, this paper looks at how outcomes in physician ser...

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Bibliographic Details
Published inJournal of economics & management strategy Vol. 14; no. 3; pp. 665 - 699
Main Author Smith, Richard B.
Format Journal Article
LanguageEnglish
Published 350 Main Street , Malden , MA 02148 , USA , and PO Box 1354, 9600 Garsington Road , Oxford OX4 2XG , UK Blackwell Publishing, Inc 01.09.2005
Wiley Subscription Services, Inc
Subjects
Asymmetric information
Business studies
Consumer education
Correlation analysis
Doctors
Empirical tests
Health care
Health care industry
Health economics
Health management
Market structure
Medical care
Patients
Physicians
Quality of service
Quality standards
Studies
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Summary:This paper looks at the impact of patient knowledge on utilization and quality in physician services markets, developing a theoretical framework based on an alternative to the “market failure” perspective first proposed by Arrow (1963). Specifically, this paper looks at how outcomes in physician services markets are determined by whether patient and physician knowledge are substitutes or complements in health production. Empirical testing of the theoretical predictions indicates patient and physician knowledge have changed from substitutes to complements in recent years, and that this change may be hindering a more consumer‐driven market from ensuring high quality outcomes.
Bibliography:ark:/67375/WNG-WP3FZ3P0-D
ArticleID:JEMS078
istex:107B3560AECA7F275A676B7273FCF93323D251B7
Financial support for this study was provided by a grant from the Center for Health Research in the Institute for Business and Economic Research, University of California at Berkeley. The author thanks Richard Scheffler, Farasat Bokhari, Jonah Gelbach, Gabriel Picone, Jeffrey DeSimone, R. Mark Wilson, Thomas Carter, seminar participants in the Health Policy Research Training Program (2001–03) at the University of California at Berkeley's School of Public Health, as well as a coeditor and two anonymous referees for helpful comments and suggestions. The author is also grateful for the comments of Helen Citkina and other participants of the Health Economics Research Organization (HERO) session at the 2004 meetings of the Allied Social Science Association. Sukyong Seo provided valuable research assistance. Finally, the author is very grateful for the insights and comments of Dennis Heffley on an earlier version of this paper. All interpretation of results and methods to achieve them are the sole responsibility of the author.
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ISSN:1058-6407
1530-9134
DOI:10.1111/j.1530-9134.2005.00078.x