Daniel Bennett and his colleagues have posted an interesting working paper on the effect of physician competition on antibiotic prescribing practices. The paper argues that competition among medical providers makes some physicians prescribe antibiotics when they might otherwise refrain, because patients think doctors who freely give out antibiotics are better and physicians want business. I've heard a similar, but slightly different, rationale from friends of mine. Both sides claim that physicians appease patient demand for antibiotics in an effort to retain patients. A key difference is that my friends suggest the physicians who change their prescribing practices as a result of competition do so because they believe that they are benefitting patients in the long run, because if these patients were to become seriously ill, they would still be under the care of responsible physicians rather than under the care of irresponsible physicians (judged of lesser quality by their willingness to overprescribe in the absence of competition). In this way, patients and physicians are both acting based on their perceptions of physician quality signaled by antibiotic prescribing.