Motivation and competition among physicians

Non-pecuniary sources of motivation are a strong feature of the health care sector and the impact of competitive incentives may be lower where pecuniary motivation is low. We test this hypothesis by measuring the marginal utility of income of physicians from a stated-choice experiment, and examining whether this measure influences the response of pricing decisions to a geographical measure of competition. We find that physicians exploit a lack of competition with higher prices only if they have a high marginal utility of income.