Do Physicians Induce Demand for Medical Services?

In this paper we provide a critique of an article by Roger Feldman and Frank Sloan that appeared in the Summer 1988 issue of this journal. In that article, the authors contend that there is little evidence to support the notion of supplier-induced demand or the contention that physicians generate demand to avoid the impact on their incomes of government price controls. In this critique, we argue that the evidence on supplier-induced demand and physician responses to price controls does not support the conclusions drawn by Feldman and Sloan. We conclude with a discussion of the implications of the debate for policy formulation and future research.