An evaluation of the effect of increasing doctor numbers in their geographic distribution

This report investigates the impact of a growing doctor supply upon geographic inequalities. It is an enlargement of the preliminary theoretical and empirical work presented in Richardson (1988). The study is relevant to the policy issue of whether or not intervention in the market is necessary to achieve a socially optimal distribution of medical practitioners. The chief interest is the impact of a rising doctor supply on the distribution of doctors and whether or not this will change the distribution in a way that will satisfy social objectives. When distribution is determined entirely by demand factors doctors will select practice locations that equalise their net real incomes. A subsequent growth in the doctor supply should result in an equiproportional growth in areas with similar demand conditions. The conclusion is less clear-cut if the initial equilibrium is the result of differing levels of supplier-induced demand and there is an upper limit to this. The chief concern in the second half of the study is with the growth rate of the doctor supply in different areas when the initial distribution is determined by doctors' personal preferences for particular residential locations. The most interesting question is whether the growth of the doctor supply will or will not lessen inequalities caused by these preferences.