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Content: 4. The Third-Party Buyer Effect
"No, thank you, I don't want a cocktail. Oh, they're free? Then I'll have
two!" This is the third-party buyer effect. Whenever goods and services
are provided at zero cost to the buyer, consumption of that thing is likely
to rise dramatically unless limited in some other way. Examples: When Canada first socialized its health care system, doctors' offices were
flooded with patients seeking treatment for the most minor of illnesses
(real and imagined), and doctors sent inflated bills to the government. Eventually, the government sought to limit this practice by placing ceilings
on the prices doctors could charge, expecting that doctors would then start
limiting the number of patients they saw. Instead, doctors avoided the
price controls by decreasing the length of doctor visits and having patients
visit more often (because the price controls were set on a per-visit basis).