hen 368 lecture 10 markets
TRANSCRIPT
![Page 1: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/1.jpg)
Health EconomicsLecture 10
Physician Market
![Page 2: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/2.jpg)
PerfectCompetition
Monopolistic Competition
Oligopoly Monopoly
Number of Firms
Many Many Few One
Type of Product Identical Different Similar Unique
Ease of Entry Easy Easy Substantial Blocked
Demand D = MR DynamicGame
TheoryD > MR
ExamplesCommodities
RiceApples
Cell Phones UtilitiesGovernment
Market Structure and Power
0% 100%
![Page 3: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/3.jpg)
Eddie
Willie
Betrays
Willie1 Year
Silent
Silent
Betrays
Eddie1 Year
EddieGoes Free
Willie10 Years
WillieGoes Free
Eddie10 Years
Willie5 Years
Eddie5 Years
Prisoner's
Dilemma
![Page 4: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/4.jpg)
Prisoner's Dilemma
Pursuing the Dominant Strategy
Results in Non-Cooperation
and Leaves Everyone
Worse Off
![Page 5: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/5.jpg)
Game Theory
RulesStrategies
Payoffs
![Page 6: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/6.jpg)
John Nash(1928 - )
Game TheoryNash Equilibrium
Nobel 1994
A Beautiful Mind
![Page 7: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/7.jpg)
Duoploy
Two Sellers
![Page 8: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/8.jpg)
50 SR
100 SRVerizon1,000
100 SR
AT&T1,000
50 SR
Verizon500
Verizon2,000
Verizon700
AT&T2,000
AT&T500
AT&T700
1. Reduce Price2. Sell more3. Increase profit
![Page 9: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/9.jpg)
Physician Market
Asymmetric Information
Justifies Government Intervention
Protect the Public
![Page 10: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/10.jpg)
Barriers to Entry
EducationResidency Licensing
![Page 11: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/11.jpg)
Quantity
Price
Physician Market
Demand
Supply
Q2
P2
Q1
P1
1. Reduce Supply
2. IncreasePrice
3. Reduce Quantity
![Page 12: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/12.jpg)
Can the Market do a better job of weeding-out incompetent
physicians than the Government?
IncentivesBureaucrats vs. Entrepreneurs
Who decides?
![Page 13: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/13.jpg)
Market Incentives
Medical LiabilityFor-Profit Providers
Brand NamesEmployed Physicians
![Page 14: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/14.jpg)
Government Incentives
Bad reward for bad physicians
No rewards for good physicians
Bribes
Cannot be held liable - sued
Unseen
![Page 15: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/15.jpg)
Optimal Practice Size
Economies of scale
3 - 7 physicians
![Page 16: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/16.jpg)
Supplier-Induced Demand
Demand
Supply
Q2
P2
Q1
P1
1. Increase Demand 2. Increase Price 3. Increase Quantity
![Page 17: Hen 368 lecture 10 markets](https://reader034.vdocuments.us/reader034/viewer/2022052323/55897935d8b42a3f1e8b466e/html5/thumbnails/17.jpg)
Malpractice Insurance
Compensate Victims
Deter Malpractice
Defensive Medicine