The effects of regulation and competition in the NHS internal market: the case of general practice fundholder prices.

The 1989 reforms of the UK National Health Service introduced competition in supply within a tightly regulated framework. The paper examines whether this competition affects the prices posted by sellers of medical services. We argue that despite regulation market forces may have an impact on price. We test this using the posted prices for one of the two types of buyer, General Practice Fundholders. We find the regulatory rules are not observed, and some evidence of the impact of market forces on price.