Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Physician Competition: Entry and Substitution
Journal of Economic Perspectives
(pp. 117–42)
(Complimentary)
Abstract
We describe competition in the physician market, focusing on how entry barriers and substitution possibilities have changed in recent decades. Regulatory caps on medical school seats and residency slots—especially for high-paying specialties—continue to ration entry, generate high returns for those who gain these slots, and direct the most academically accomplished trainees toward lucrative fields. But trained physicians increasingly compete with nurse practitioners, physician assistants, and other mid-level practitioners in the market for patients. Training of these substitutes has expanded far more rapidly than physician supply. We present key facts about the physician pipeline, a conceptual framework linking specialty earnings to entry barriers, and describe the rise of mid-level providers. These facts mean that effective competition policy in physician markets must look beyond conventional concentration measures and focus on the institutions and laws that govern who can provide medical care.Citation
Gottlieb, Joshua D., and Sean Nicholson. 2026. "Physician Competition: Entry and Substitution." Journal of Economic Perspectives 40 (2): 117–42. DOI: 10.1257/jep.20251473Additional Materials
JEL Classification
- I11 Analysis of Health Care Markets
- I18 Health: Government Policy; Regulation; Public Health
- J31 Wage Level and Structure; Wage Differentials
- J41 Labor Contracts
- J44 Professional Labor Markets; Occupational Licensing