ABSTRACT
This chapter demonstrates the deficiencies of applying a market model to resource decisions in healthcare and emphasises the importance of institutional setting, culture history and power. From a sociological perspective, key dimensions for analysing economic interactions in healthcare are: the relative frequency of transactions, their relative complexity, their relative specificity, their relative size and risk, their relative quality of information, the degree of social relationship over time. Proper or formal markets and institutional actors are based on the axioms of this core theory of economic behaviour. Price theory is based on them. Most of the regulations and laws governing economic behaviour are based on these assumptions of how people behave. From a research perspective, the assumptions, principles and theory of economic behaviour can be tested as hypotheses. Managed competition appears to surmount the obstacles to effective markets in healthcare, and it is uncritically embraced as the model for making healthcare services more efficient and responsive via competition.
