Searching for Health: The Effects of Online Price Transparency
51 Pages Posted: 4 Nov 2015
Date Written: October 1, 2015
Recent technologies provide consumers with access to price information for medical services, a market with uncharacteristic price dispersion and opaque prices. This paper examines the effects of an online price transparency platform on consumer behavior. I find that consumer use of price transparency information leads to a 16% reduction in prices for lab tests, 15% reduction for advanced imaging, and has an approximately 1% effect for physician office visits. Consistent with a search costs model, I find larger effects in markets with high price dispersion. However, for physician office visits, the value of non-price information exceeds the value of price information.
Keywords: Price transparency, health care prices, consumer search
JEL Classification: I12, D83, I11, L86
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