The Residency Match: Competitive Restraints in an Imperfect World

In 2002 physicians filed a lawsuit alleging that “the match,” the more than fifty-year-old system by which medical students and other applicants are assigned to medical residency programs, violates section 1 of the Sherman Act. Last year, without hearings on the issue, Congress found that the match was “highly efficient” and “pro-competitive” and granted a retroactive antitrust exemption for its operation. These seemingly incompatible views invite further analysis of the merits of the residency match from the perspective of public policy. This Article considers the arguments of match advocates and critics, evaluating both theoretical models and empirical evidence of the effects of the match on resident compensation. It rejects the assertion that matching mechanisms are necessarily inefficient, and instead describes factors that should be considered in an assessment of efficiency. The Article concludes that given the role of the residency match in remedying market imperfections, the ∗ Assistant Professor, University of Pennsylvania Law School and Senior Fellow, Leonard Davis Institute of Health Economics. I thank Christopher Avery, Peter Hammer, Dan Kessler, Fran Miller, Mark Pauly, Ed Rock, Al Roth, Chris Sanchirico, Reed Shuldiner, Jennifer Stack, Raphael Thomadsen, Akila Weerapana, and participants of the University of Pennsylvania Law School and the University of Michigan Law and Economics workshops for their comments and suggestions. (4) MADISONG1 10/10/2005 2:52 PM 760 HOUSTON LAW REVIEW [42:3 congressional grant of an exemption was justified. It also suggests, however, that further action may be required to ensure that the matching process obtains the maximum possible social benefit.