Rich doctors and poor patients: Market failure and health care systems in developing countries

Abstract

This article argues that, in developing countries, health care systems (HCS) have been facing the problem of market failure, implying that the fair rules of market principles do not apply and patients often become losers. Explaining the theoretical issues involved, the article examines various causes of market failures in HCS, including: rent-seeking activities by doctors, asymmetric information between doctors and patients, between patients and insurance companies, and the oligopolistic behaviour of health care practitioners. The policy implications of the study suggest that, in many cases, government intervention is essential to eliminate market failures in the HCS in developing countries.