Question

The structure of the physicians service market has resulted in the development of the supplier-induced demand hypothesis to explain conduct in the market. In at least a 250 word posting, discuss the theoretical and empirical issues surrounding the supplier-induced demand hypothesis. After reading the postings of other students select the one that you found most interesting to respond to. Your response should be at least 75 words and include why you found this posting interesting.

Answer 1

This isSupplier induced demand generally seen in healthcare industry happens when there is an induced demand due to information assymetry. Healtcahre professionals diagnose a problem and then push for the solution as well with limited answerability to the patient. Any extra demand created due to this information asymmetry is known as supplier induced demand.
There is definitely a range of doctors who will be involved in this practice, if social policies are formed keeping in mind that all doctors are involved in such habits which is not actuall true, there will be reduced social welfare in the society. Empirically there have been researches which mention that with increased density of doctors in an areas there is increase per capita spend on medical leading to more and more demand inducement. This includes both overuse of existing methods as well as inventing new methods to treat existing diseases.
There is also one more dimension and behaviour observed by healthcare professionals, where under competition doctors come under pressure to protect their income levels and hence get involved in demand inducement versus when they have monopolistic power and control over their earnings. my solution..