This study examines the relationship between supply of primary physicians and consumer
satisfaction with access to, and quality of, primary physician services in Norway.
The purpose is to throw light on a long-standing controversy in the literature on supplier
inducement SID : the interpretation of the positive association between physician density Ž .
and per capita utilization of health services. We find that an increase in the number of
physicians leads to improved consumer satisfaction, and that the relationship between
satisfaction and physician density exhibits diminishing returns to scale. Our results suggest
that policy-makers can compute the socially optimal density of physicians without knowledge
about whether SID exists, if one accepts the controversial assumption that consumer Ž .
satisfaction is a valid proxy for patient utility. q 2000 Elsevier Science B.V. All rights
reserved