Hospital Competition and Quality with Regulated Prices

26 Pages Posted: 24 May 2011

See all articles by Kurt Richard Brekke

Kurt Richard Brekke

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

Luigi Siciliani

University of York

Odd Rune Straume

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

Date Written: June 2011

Abstract

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 semiā€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.

Keywords: Hospital competition, quality, altruism, H42, I11, I18, L13

Suggested Citation

Brekke, Kurt Richard and Siciliani, Luigi and Straume, Odd Rune, Hospital Competition and Quality with Regulated Prices (June 2011). Scandinavian Journal of Economics, Vol. 113, Issue 2, pp. 444-469, 2011, Available at SSRN: https://ssrn.com/abstract=1851189 or http://dx.doi.org/10.1111/j.1467-9442.2011.01647.x

Kurt Richard Brekke (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Luigi Siciliani

University of York ( email )

Heslington
University of York
York, YO10 5DD
United Kingdom

Odd Rune Straume

University of Minho - Economic Policies Research Unit (NIPE) ( email )

Campus de Gualtar
Braga, 4710-057
Portugal

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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