This paper provides a model of the pricing of a physician's output. Each medical specialty behaves as a cartel, choosing prices which maximize profits for a representative practitioner. Two assumptions distinguish the model from previous work, and generate key results: (1) Within specialties, all activities have the same price per unit of physician's time. (2) For physicians, there are no artificial barriers to entry into specialty practice. The model implies a "surplus" of surgeons, an outcome which has been observed in the medical literature. Additional empirical tests are provided.
