Journal of health economics
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The focus of the present study is to examine whether supplier-induced demand exists for primary care physician services in Norway. We compare how two groups of physicians, with and without incentives to induce, respond to increased competition. Contract physicians receive their income from fee-for-item payments. ⋯ Even though increased competition for patients reduces the availability of patients, they have no financial incentive to induce. Neither of the two groups of physicians increased their output as a response to an increase in physician density. This result could be expected for salaried physicians, while it provides evidence against the inducement hypothesis for contract physicians.