10(40)
perception of the price elasticity directed towards their own practice.
This is interpreted as evidence against dentists' exploiting their perceived
market power. It is noteworthy that dentists' subjective estimates of price
elasticities are lower on average than the estimated mean price elasticity.
The validity of both estimates are however questionable. First, it is unclear
what the dentists' perceptions are based on. Second, it is unclear how the
estimate that Grytten and Sørensen (2000) call the “actual price” elasticity
is identified. The results should therefore be interpreted with caution.
Grytten and Sørensen also find that a 1% increase in dentist density is
associated with a fall in mean expenditures and fees in the range 0.12%
to 0.31%. This is interpreted as competition having a weak effect on
dentists' price setting. A concern with these results is that it is unclear
what drives changes in the density.
Eriksson (2004) is the only previous study of price setting in Swedish
dental care. The focus of Eriksson (2004) is price leadership rather than
price competition per se.
