A Shirking Theory of Referrals

La Trobe University School of Economics Working Paper No. 1

34 Pages Posted: 1 Mar 2013

See all articles by Damien Eldridge

Damien Eldridge

La Trobe University School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 8, 2013

Abstract

The health care industry in some countries displays a gated structure. Rather than approaching a specialist directly, a patient will first seek a referral from a general practitioner. We provide one possible explanation for such an industry structure. If the outcome of treatment depends on the effort exerted by the treating specialist, then a market failure might occur. By aggregating many patients, general practitioners can sometimes create an artificial long-run relationship between a patient and a specialist that otherwise would have a short-run relationship. Such an artificial long-run relationship reduces the incidence of shirking on the part of the specialist.

Keywords: Gatekeepers, Reputation, Moral Hazard, Referral

JEL Classification: C73, D82, I11

Suggested Citation

Eldridge, Damien Sean, A Shirking Theory of Referrals (February 8, 2013). La Trobe University School of Economics Working Paper No. 1, Available at SSRN: https://ssrn.com/abstract=2226339 or http://dx.doi.org/10.2139/ssrn.2226339

Damien Sean Eldridge (Contact Author)

La Trobe University School of Economics ( email )

School of Economics
La Trobe University
Melbourne, Victoria, 3086
Australia

HOME PAGE: http://www.latrobe.edu.au/economics/about/staff/profile?uname=deldridge

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
547
PlumX Metrics