Competition between For-Profit and Nonprofit Health Care Providers and Quality

Rune Stenbacka, Mihkel Tombak

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We develop a model including many features of health care systems: a limited number of approved treatments of certain qualities, insurance schemes reimbursing costs of a standard service, and nonprofit organizations competing with for-profit suppliers. All the equilibria exhibit quality differentiation, and the nonprofit captures a higher market share. Nonprofits (for-profits) supply the standard service when the quality upgrade induces a sufficiently high (low) increase in production costs. When the nonprofit provides the standard quality, all patients are served. In contrast, in a for-profit duopoly the standard-quality provider chargesa price premium, implying that there are excluded consumers.
Original languageEnglish
Peer-reviewed scientific journalJournal of Institutional and Theoretical Economics
Volume176
Issue number2
Pages (from-to)243-275
Number of pages33
ISSN0932-4569
DOIs
Publication statusPublished - 12.03.2020
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • competition between for-profits and nonprofits
  • exclusion
  • health care quality
  • Mixed Duopoly
  • nonprofit organizations
  • quality differentiation

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics

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