In most of the countries in transition from a planned to a market economy (firmer Soviet Union (FSU) and Central and Eastern Europe (CEE)) patients are routinely asked to pay unofficially for the medicines and other supplies that ought to be free. They are often described as 'payments to...

In most of the countries in transition from a planned to a market economy (Former Soviet Union (FSU) and Central and Eastern Europe (CEE)) patients are routinely asked to pay unofficially for the medicines and other supplies that ought to be free. They are often described as "payments to...

We consider a discriminatory pricing and service differentiation model where: a)state physicians exploit their monopoly position and adjust quality to the unofficial payment made, and b)patients, perceiving state provision as poor, pay unofficially to improve it. Applying OLS and probit analysis...