This paper develops an alternative model for the discriminatory pricing behavior of physicians. By introducing search cost explicitly, it generates a result that price discrimination will be practiced by all physicians even if the elasticity of market demand is less than one and all or most of...

The influential Scherer and Ross text (1990, p. 411) states that the “main question” in empirical industrial organization in the latter part of the twentieth century is Bain’s (1951) “collusion” or “agreement” hypothesis versus Demsetz’s (1973) “superior firm” hypothesis. Prior to the...