Optimal Multi-Channel Delivery of Expertise: An Economic Analysis

Zafer D. Ozdemir
International Journal of Electronic Commerce,
Volume 11, Number 3, Spring 2007, pp. 089.

Abstract: Consumers use the Internet to minimize uncertainty when making important health-related decisions. Physicians are interested in delivering their expertise on-line even if they are unable to physically examine patients. A game-theoretic model was used to study the optimal channel strategies of capacity-constrained experts who provide consultation services via a face-to-face and an on-line channel. A consumer seeking consultation service can be in either a good or a bad state, each of which entails symptoms the expert can observe. As shown by the model, an expert can charge a higher price on-line than face-to-face and still find consumers willing to use the new service. If both channels are utilized, consumers who are more certain about their state are served on-line. The optimal price of an on-line consultation increases with the time required for the service. Experts need to consider several issues in pricing their services, but as the model shows, offering on-line consultations makes economic sense. Medical experts can use insights derived from the model to simultaneously manage face-to-face and on-line channels in selling their expertise.

Key Words and Phrases
: E-health, expert service, on-line consultation, private information good, telemedicine..