I can speak from the experience in Quebec.
The incentive structure that works best, in my mind, is one that is tied to the characteristics of the practice. In other words, the major thing that distinguishes a rural physician from his urban colleague is—and the word is best in French—la polyvalence de la pratique: the fact that the physician is responsible for patients who are sick in hospital and who may be in the intensive care unit, or they may be obstetrical patients; the physician will also have an office practice and may be on duty in the emergency room and have to deal with trauma.
It's the broad range of responsibility and the training required to get there that justifies a differential. This is better than pure geography, because if people have an incentive program that is based purely on geography, it carries a negative connotation that the community does not have other things to provide and that therefore they need an incentive just to change their geographical location.
Many countries have the same level of responsibility incentives for other health professionals. I believe in Australia the rural nurses have incentives to establish in rural areas. This is lacking in Canada, because a lot of the enhanced responsibility that rural nurses or rural pharmacists have is not recognized by their negotiating bodies, and there really isn't a structure for this.
The effect of incentives has to be recognized throughout the whole career of the physician. Big lump sums up front, as was mentioned, cause division within the community when long-established physicians see themselves not being recognized.