Figure 15.2 shows how increased competition can lead to a higher degree of inducement at point  .this suggest that providers try to induce more usage to compensate for lower profit margins. Suppose,...


Figure 15.2 shows how increased competition can lead to a higher degree of inducement at point
 .this suggest that providers try to induce more usage to compensate for lower profit margins. Suppose, however, that the physician ends up at a different point, call it
, where there is less inducement than at. Could convex indifference curves be drawn so that the change to the
′ rate of profit would lead to this reduced inducement?



May 20, 2022
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