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Hospital Competition and Quality with Regulated Prices *
Author(s) -
Brekke Kurt R.,
Siciliani Luigi,
Straume Odd Rune
Publication year - 2011
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2011.01647.x
Subject(s) - competition (biology) , monopoly , economics , quality (philosophy) , microeconomics , contrast (vision) , ecology , philosophy , epistemology , artificial intelligence , computer science , biology
We analyse the effect of competition on quality in hospital markets with regulated prices, considering the effect of both introducing competition (monopoly versus competition) and increasing competition through either lower transportation costs (increased substitutability) or a higher number of hospitals. With semi‐altruistic providers and a fairly general cost structure, we show that the relationship between competition and quality is generally ambiguous. In contrast to the received body of theoretical literature, this is consistent with, and potentially explains, the mixed empirical evidence.