6533b835fe1ef96bd129f138

RESEARCH PRODUCT

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

subject

description

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.