A New Institutional Economics Perspective on the Relationship Among Societal Values, Governance Structure and Access to Rural Health Care Services
Forthcoming, Southern Business & Economic Journal
17 Pages Posted: 23 Aug 2007 Last revised: 14 May 2014
Date Written: May 1, 2014
According to New Institutional Economics, transactional activities, governance structures, institutions and beliefs and values are related hierarchally. Each element must be aligned with the adjacent level for transaction costs to be minimized. This framework is applied to the question of balancing costs and access in the provision of rural health care. Transaction costs in providing health care services can be minimized if all hierarchal functions are aligned. A focus on the highest level of beliefs and values points to potential problems. Specifically, beliefs that health care is a right may not align with efforts to introduce market-based governing structures in rural health care services. This misalignment can result in excessive transaction costs. When corrected, the transaction cost savings can be used to free resources needed to increase access to rural health care. An example from the Chinese health care system illustrates the principles described in this paper.
Keywords: rural health care, health care access, efficiency, new institutional economics, rights
JEL Classification: D23, I11, O18, P00
Suggested Citation: Suggested Citation