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- Type of Document: M.Sc. Thesis
- Language: Farsi
- Document No: 43220 (44)
- University: Sharif University of Technology
- Department: Management and Economics
- Advisor(s): Fatemi Ardestani, Farshad
- Abstract:
- In standard models, the demand function is considered to be independent from the supply function and the intersection of these curves is considered to determine the price and quantity in the market. The alternative model, called “inducement hypothesis”, describes how the supply side can persuade consumers through particular advices, induce demand for the provided services and though shift the demand curve; i.e. demand is not independent from supply. For the case of physicians, this hypothesis is known as “physician induced demand”. In fact, this theory describes the supply-side moral hazard in the production market. This hypothesis may have vast applications which are different from conventional demand models.
In this study, the literature of the topic is first reviewed. Then the implications for empirical test of this hypothesis are analyzed by introducing models for induced demand. The empirical evidence for induced demand in the Caesarean section in Iran is then analyzed with a model for this market and by use of instrument variables in its estimation. The results show that the null hypothesis, which states that the induced demand does not exist, is not rejected. This result can be explained by the tendency of physicians to preserve their reputation, their disutility from non-optimum prescriptions and the absence of income effect for inducement - Keywords:
- Health Economics ; Physician Induced Demand ; Supply-Side Moral Hazard
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