Hospital Competition and Quality with Regulated Prices

Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune

doi:10.2139/ssrn.1396621

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Hospital Competition and Quality with Regulated Prices

CESifo Working Paper Series No. 2635

27 Pages Posted: 29 Apr 2009

See all articles by Kurt Richard Brekke

Kurt Richard Brekke

NHH Norwegian School of Economics - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Odd Rune Straume

CESifo (Center for Economic Studies and Ifo Institute); University of Minho - Economic Policies Research Unit (NIPE)

Date Written: April 2009

Abstract

We analyse the effect of competition on quality in hospital markets with regulated prices, considering both the effect of (i) introducing competition (monopoly versus competition) and (ii) increasing competition through 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 theoretical literature, this is consistent with, and potentially explains, the mixed empirical evidence.

Keywords: hospitals, competition, quality

JEL Classification: H42, I11, I18, L13

Suggested Citation: Suggested Citation

Brekke, Kurt Richard and Siciliani, Luigi and Straume, Odd Rune and Straume, Odd Rune, Hospital Competition and Quality with Regulated Prices (April 2009). CESifo Working Paper Series No. 2635, Available at SSRN: https://ssrn.com/abstract=1396621 or http://dx.doi.org/10.2139/ssrn.1396621