An Equilibrium Search Model of the French Dual Market for Medical Services

Abstract

The French market for specialist physician care has a dual structure, including a sector 1 with regulated fees, and a sector 2 where physicians can freely choose fees. Patients who undergo a sequential search process for the best medical o¤er develop a reservation fee decision rule. We analyzed physicians decisions to work in sector 1 or in sector 2, and their choice of fee in sector 2. The model features several pure strategy equilibria that can be ordered with respect to patient welfare. Policy implications follow.