Abstract
Relatively little is known about the behavior and performance of firms organized as partnerships. In this paper we attempt to fill that gap by developing and testing a model of the effect of alternative compensation arrangements on productive efficiency in medical group practices. The technique employed is maximum likelihood production frontier estimation. We provide a simple behavioral model of the determination of productive efficiency and a new interpretation of the economic measure of technical efficiency. We derive a "behavioral production function" that relates production to individual responses to incentives, and we indicate the impossibility of recovering the parameters of the production technology from observed behavior. Overall, the empirical results indicate that incentives do affect productivity. A larger number of members in a group decreases productivity while greater average experience leads to greater productivity.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
