The supply of physicians' services

Abstract

This paper presents a model of the supply of physicians' services based upon the assumption that physicians are price-taking utility maximizers. Assuming physicians' services are produced using physicians' labor and purchased inputs, the paper shows that the impact of changes in final product or input prices on the supply of physicians' services depends on the physicians' labor-leisure choice and on the degree of substitutability between physicians' labor and purchased inputs. The empirical results presented indicate that the physicians' labor supply curve is backward-bending, but that the supply curve of physicians' services is positively sloped.