Economics and Trust in Veterinary Care

Veterinary fees in the United Kingdom have risen sharply, and the Competition and Markets Authority has responded with proposals for greater transparency, including published price lists and comparison tools. These measures assume that the problem resembles a standard market failure: prices are high because consumers cannot easily compare options.

But the behaviour of pet owners during a consultation suggests a different structure. Decisions are typically made before price is discussed. A vet recommends a diagnostic step or a course of treatment, and the often-distressed owner agrees straightaway. Questions focus on the animal’s condition and the likely outcome, with the cost often considered only once the invoice is presented, after the service has been delivered.

Economists would recognise this as a market for credence goods. In such markets, the customer, not being an expert, cannot easily determine what is necessary, or whether it has been carried out correctly, or if a cheaper alternative would have sufficed. The provider identifies the problem, recommends the solution, and delivers it – all within the same interaction. Dentistry and car repair share similar features. Veterinary care fits the model closely.

In credence goods markets, verification is difficult, so trust substitutes for it. That substitution has economic consequences. Trust reduces the need to question each recommendation, which lowers transaction costs. It allows decisions to be made quickly, without seeking second opinions or comparing providers. In a setting where an animal may be in pain, that efficiency is valuable.

At the same time, it weakens the role of price at the moment when it would normally guide behaviour. When agreement is given before the cost is known, demand becomes less sensitive to price. Economists would describe this as a form of inelastic demand. The owner’s willingness to proceed is driven by the perceived cost of inaction rather than by the price of treatment.

There is also a familiar principal–agent problem. The owner delegates decision-making authority to the vet, who has more information. In many markets, this imbalance is moderated by monitoring or by competition between providers. In veterinary care, both are limited. The owner cannot easily evaluate the necessity of each step, and switching providers in the middle of a consultation is costly in time, stress, and perceived risk to the animal.

Over the past decade, the structure of the veterinary market has significantly altered. Independent practices have been acquired by large corporate groups, introducing more centralised pricing and more standardised treatment pathways. These changes alter the incentives within the system. Pricing becomes more uniform, and treatment sequences are more clearly defined.

None of this is immediately obvious in the consultation itself, where the interaction still appears as a direct exchange between owner and clinician, with recommendations carrying the authority of professional judgement. The difference lies in how those recommendations are organised and priced. Diagnostic steps, follow-up procedures, and medication plans are increasingly arranged into sequences, each with associated costs that accumulate over visits.

The behaviour of owners has not adjusted to this change in the market structure. Trust continues to operate as it did in a more local and less consolidated system. It reduces the questioning and comparison. In economic terms, it removes one of the few remaining constraints on price in a credence goods market.

When a market combines credence goods, inelastic demand, and a principal–agent structure, pricing does not respond in the same way as in standard competitive settings. The interaction can appear to remain unchanged while the underlying economics shifts, resulting in a system in which decisions continue to be made as if trust were sufficient to align incentives, even when the structure of those incentives has changed.

The regulatory response of the Competition and Markets Authority focuses on transparency on the assumption that better information will strengthen competition. That assumption holds in markets where consumers compare options before committing to a purchase but veterinary care usually operates differently. Critical decisions are made within the consultation, under conditions of uncertainty and urgency, and typically before the full cost is known. In that setting, price plays a limited role at the moment it would otherwise constrain behaviour. Trust and immediacy take precedence over comparison. Price lists and comparison tools may influence choices at the margins, particularly in non-urgent cases, but they do not alter the structure of decision-making within the consultation itself. If the current market structure remains unchanged, the underlying economic dynamics will persist.