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16 Apr 2012
Lecture 9
Profit Maximizing Model
- physicians produces where mr=mc
- with imperfect info, improve profits by inducing consumers to buy more output
- demand shifts pit because of advertising
- cats will be higher because of advertising, so that also shifts up mc curve
- another model used: more in USA vs. CDA
- dentists in canada similar to his model
Small Area Variation
- asses to what extent geographic variation in per capital utilization
- rates reflect imperfect info about the most effective of alternative treatments
- look at diff communities and compare the medical utilization they have
- want to identify area with similar demographics and compare difference in example:
amount of c sections given
- this is known as practice style hypothesis:
- how a physician is trained determines how they treat a condition
- could be de due to advances in medical technology
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