A shirking theory of referrals /

Many service industries, including the medical and legal professions in some countries, display a gated structure. Rather than approaching a final producer directly, a consumer will first seek a referral from an intermediary. In this paper, we provide one possible explanation for such an industry st...

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Bibliographic Details
Main Author: Eldridge, Damien S. (Sean)
Other Authors: Ryan, Chris
Format: Book
Language:English
Published: Bundoora, Vic. : La Trobe University. School of Business, 2007
Series:Discussion papers (La Trobe University. School of Business) 07.05
Subjects:
Online Access:http://www.latrobe.edu.au/__data/assets/pdf_file/0017/130904/2007.05.pdf

MARC

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300 |a 42 p. 
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520 3 |a Many service industries, including the medical and legal professions in some countries, display a gated structure. Rather than approaching a final producer directly, a consumer will first seek a referral from an intermediary. In this paper, we provide one possible explanation for such an industry structure. If the outcome of a transaction depends on producer effort, which is unobservable and unverifiable, then the market may fail to generate a Pareto optimal outcome. This is the standard moral hazard problem. If consumers had a long-run relationship with producers, this type of market failure might be avoided. However, in some industries, consumers will only have a short-run relationship with producers. A gate-keeping intermediary may provide an opportunity for reputation effects to apply in such a setting. By aggregating many potential consumers, gate keeping intermediaries can create an artificial long-run relationship between a consumer and a producer. This long-run relationship reduces the incidence of shirking on the part of the producer. 
650 4 |a SERVICIOS DE SALUD  |9 2439 
650 4 |a ATENCION EN SALUD  |9 5018 
650 4 |a SERVICIOS DE SALUD  |9 2439 
650 4 |a ANALISIS ECONOMETRICO  |9 97 
651 4 |a AUSTRALIA  |9 204 
653 4 |a ATENCION MEDICA 
700 1 |9 4652  |a Ryan, Chris 
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