Suppose you are the manager of a hospital and you notice that the doctors are four times as…

Suppose you are the manager of a hospital and you notice that the doctors are four times as productive as the nurses, but they cost only three times as much as the nurses. You would therefore be tempted to increase the number of doctors you hire and decrease the number of nurses. Unfortunately the doctors, who are very powerful in your hospital, won’t let you do this – as they do not want their marginal productivity to fall (which would put downwards pressure on their wages). This situation, in essence, corresponds to which of these models of hospital behaviour?

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