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Moral Hazard and Risk Spreading in Partnerships
Abstract
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
... I denne organisasjonsformen beholdes alle inntekter av den tannlegen som genererer dem. Fra et effektivitetssynspunkt er dette gunstig ved at inntjeningen direkte avhenger av den enkelte tannleges arbeidsinnsats (12)(13). ...
... Vi må forvente at praksisene bruker en del ressurser på å utarbeide kriterier for fordelingen av inntekter som kan oppfattes som rettferdige av de berørte parter. Det tradisjonelle problemet med inntektsdeling er at noen lett blir gratispassasjerer på andre kollegers bekostning (12)(13). Dersom tilstrekkelig mange blir gratispassasjerer, vil den samlede produksjonen i praksis gå ned, med et påfølgende effektivitetstap som konsekvens. ...
... Våre resultater er også i samsvar med andre studier fra helsetjenesten. For eksempel viser amerikanske studier at leger som arbeider under incentivbaserte avlønningsformer i gruppepraksiser hadde høyere output sammenlignet med de som arbeidet under fastlønn (19,20). I en studie fra allmennlegetjenesten i Norge fant Sørensen og Grytten at stykkprisavlønnede allmennleger har vesentlig høyere produktivitet enn allmennleger som er på fast lønn (21). ...
... In health economics, an extensive literature has investigated how physician incentive schemes like capitation and fee-for-service payment lead to deviations from patient-optimal treatment (e.g., Ellis andMcGuire, 1986, 1990;Ellis, 1998;Iversen and Lurås, 2012). Theoretical and empirical evidence on the relationship between physician remuneration and the quality of medical care suggests that capitation entails an incentive for underprovision, while fee-for-service can induce overprovision (see, e.g., Ellis and McGuire, 1986;Gaynor and Gertler, 1995;Gosden et al., 2000;Patcharanarumol et al., 2018). Experimental research provides similar evidence (e.g., Hennig-Schmidt et al., 2011;Green, 2014;Brosig-Koch et al., 2016Lagarde and Blaauw, 2017;Di Guida et al., 2019;Martinsson and Persson, 2019;Reif et al., 2020). ...
We study how competition between physicians affects the provision of medical care. In our theoretical model physicians are faced with a heterogeneous patient population, in which patients systematically vary with regard to both, their responsiveness to the provided quality of care and their state of health. We test the behavioral predictions derived from this model in a controlled laboratory experiment. In line with the model, we observe that competition significantly improves patient benefits as long as patients are able to respond to the quality provided. For those patients, who are not able to choose a physician, competition even decreases the patient benefit compared to a situation without competition. This decrease is in contrast to our theoretical prediction implying no change in benefits for passive patients. Deviations from patient-optimal treatment are highest for passive patients in need of a low quantity of medical services. With repetition, both, the positive effects of competition for active patients as well as the negative effects of competition for passive patients become more pronounced. Our results imply that competition can not only improve but also worsen patient outcome and that patients' responsiveness to quality is decisive.
... More generally, there is an extensive literature showing that healthcare providers are responsive to financial incentives (e.g., Gruber et al., 1999;Croxson et al., 2001;Cavalieri et al., 2014). Gaynor and Gertler (1995), studying the practices of medical groups in the United States, found that compensation agreements with higher levels of revenue sharing, such as capita, significantly reduce the efforts of physicians. Sørensen and Grytten (2003) found that Norwegian primary care physicians with an FFS contract generate a high number of consultations and other medical services compared to doctors with a CAP contract. ...
In a controlled laboratory environment, we test the role of medical malpractice liability on physicians' service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.
JEL Classification: I12; K13; C91.
... physician employees or other owners) to perform well, individual incentives such as high-powered compensation tied to individual performance are critical to success (cf. Conrad et al. 2002;Gaynor & Gertler 1995). Gaynor and Gertler's work on physician productivity shows that physicians in larger groups are more respon-Incentives for health-care performance improvement sive to high-powered (individual production-based) compensation, as might be expected if smaller groups are inherently more able to use informal monitoring and peer pressure to enforce productivity norms. ...
International health system comparisons: from measurement challenge to management tool
Agricultural contracts are agreements between the owners of various inputs over the biological stages of food production. Biological stages of production are often heavily influenced by nature both in terms of random shocks and seasonal constraints. Nature can create large opportunities for transaction costs, constrain production specialization, and impose risk on individuals. This chapter focuses on the two main types of land contracts: cropshares and cash rents. It identifies a number of characteristics of these contracts and their evolution over time. We argue that a transaction cost framework remains the most robust theory to understand the structure of contracts and note that evidence from the past 20 years confirms this. Indeed, the transaction cost model has shown its usefulness in the new environmental literature on soil conservation in light of climate change. Finally, we argue that when market selection effects are considered, the transaction cost model is also consistent with some of the new findings regarding risk aversion and contract choice.
We estimate the effects of hospital‐physician vertical integration on spending and utilization of physician‐administered drugs for hematology‐oncology, ophthalmology, and rheumatology. Using a 100% sample of Medicare fee‐for‐service medical claims from 2013 to 2017, we find that vertical integration shifts treatments away from physician offices and toward hospital outpatient departments. These shifts are accompanied by increases in physician‐administered drug administration spending per procedure for all three specialties. Spending on Part B drugs also increases for hematologist‐oncologists. At the same time, physician treatment intensity, as measured by the number of beneficiaries who receive drug infusions/injections and the number of drug infusions, decreases across all three specialties. These results suggest that the incentives of the Medicare reimbursement system, particularly site‐of‐care payment differentials and outpatient drug reimbursement rates, interact with vertical integration to lead to higher overall spending. Policies and merger guidelines should attempt to restrain spending increases attributed to vertical integration.
We study how competition between physicians affects the provision of medical care. In our theoretical model, physicians are faced with a heterogeneous patient population, in which patients systematically vary with regard to both their responsiveness to the provided quality of care and their state of health. We test the behavioral predictions derived from this model in a controlled laboratory experiment. In line with the model, we observe that competition significantly improves patient benefits as long as patients are able to respond to the quality provided. For those patients, who are not able to choose a physician, competition even decreases the patient benefit compared to a situation without competition. This decrease is in contrast to our theoretical prediction implying no change in benefits for passive patients. Deviations from patient‐optimal treatment are highest for passive patients in need of a low quantity of medical services. With repetition, both, the positive effects of competition for active patients as well as the negative effects of competition for passive patients become more pronounced. Our results imply that competition can not only improve but also worsen patient outcome and that patients' responsiveness to quality is decisive.
I estimate a matching model of business‐partnership formation to quantify the relative importance of productivity gains, financing gains, and the coordination failure of effort provision (moral hazard) among partners. Productivity gains account for 61% of the gain from the observed partnerships. For partners in the first quartile of the wealth distribution, however, financing accounts for 93% of the gain. The cost of moral hazard corresponds to 42% of the entire gain from partnerships. A loan policy specifically targeting partnerships is less effective in improving welfare than a conventional loan policy that provides loans to individual entrepreneurs.
We quantify patient-regarding preferences by fitting a bounded rationality model to data from an incentivized laboratory experiment, where Chinese medical doctors, German medical students and Chinese medical students decide under different payment schemes. We find a remarkable stability in patient-regarding preferences when comparing subject pools and we cannot reject the hypothesis of equal patient-regarding preferences in the three groups. The results suggest that a health economic experiment can provide knowledge that reach beyond the student subject pool, and that the preferences of decision-makers in one cultural context can be of relevance in a very different cultural context.
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