Competition, prices, and quality in the market for physician consultations

Hugh Stanley Emrys Gravelle, Anthony Scott, Peter Sivey, Jongsay Yong

Research output: Working paperDiscussion paper


Prices for consultations with General Practitioners (GPs) in Australia are unregulated, and patients
pay the difference between the price set by the GP and a fixed reimbursement from the national taxfunded
Medicare insurance scheme. We construct a Vickrey-Salop model of GP price and quality
competition and test its predictions using a dataset with individual GP-level data on prices, the
proportion of patients who are charged no out-of-pocket fee, average consultation length, and
characteristics of the GPs, their practices and their local areas. We measure the competition to
which the GP is exposed by the distance to other GPs and allow for the endogeneity of GP location
decisions with measures of area characteristics and area fixed-effects. Within areas, GPs with more
distant competitors charge higher prices and a smaller proportion of their patients make no out-ofpocket
payment. GPs with more distant competitors also have shorter consultations, though the
effect is small and statistically insignificant.
Original languageEnglish
Place of PublicationYork, UK
PublisherCentre for Health Economics, University of York
Number of pages34
Publication statusPublished - Jul 2013

Publication series

NameCHE Research Paper
PublisherCentre for Health Economics, University of York


  • Competition
  • Prices
  • Quality of care
  • Primary care
  • Doctors

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