http://en.wikipedia.org/wiki/Hold-up_problem http://en.wikipedia.org/wiki/Hold-up_problem The stakes are much higher in medicine/law/and finance. But similar "

http://en.wikipedia.org/wiki/Hold-up_problem http://en.wikipedia.org/wiki/Hold-up_problem The stakes are much higher in medicine/law/and finance. But similar "hold-up" dynamics are pretty frequent as low levels in car repairs (classically, taking advantage of women). A more intermediary example is is Home Building (the so-called change-orders, also at play in public works). Its really a combination of information assymetry, high-stakes, and some form of sunk cost or switching/searching costs that are prohibitive. You can't change your builder with a hole in the ground, you can't change your car-repair guy with your car-motor in pieces, etc. Alas, I don't want to beat the explanation to death. Its not meant to be the sole explanatory variable. I just thought it was useful to be aware of. In the case of healthcare, in particular, I don't dis=agree with the structural market issues (lack of direct pricing, non-transparency, etc.). But if you look at drug pricing, see what they charge for cancer drugs. And look at places like the NHS in britain who won't pay $100k for a course of drugs out of principle. There is more to the story for those interested in the subject is all.