Question

What type of market structure seems to best fit the market for physician-firms and why? Explain why in a few sentences.

Answer 1

Physician firms are hard to come by in any society meaning that they require special skills which not everyone can achieve. These are generally controlled by government agencies that issue a degree before one can start practice in a locality.

Physician firms are extremely important for a country to be able to deliver on its healthcare requirements. Though physicians are only a part of the population, these are required by both poor and rich alike. A formation of a monopoly in this would cause for lesser access

Generally speaking, it is important that these firms are rather competitive than not. In economies where this does not happen, the costs of healthcare rises as in case of underdeveloped or developing countries where physicians tend to charge a premium.

It is recommended for the market structure for physicians to be highly competitive or a case of perfect competition as this will allow for prices to be based on the concepts of demand, supply and also on competitive strategies, than companies coming together and forming a cartel.

Physician firms if form a competitive environment, allow for larger access to the general public for better healthcare facilities and also ensures, that prices to critical services are kept in check by the forces of the markets.

Please feel free to ask your doubts in the comments section.