Abstract
We analytically characterize the effects of ownership and competition in the healthcare industry on quality provision, market coverage and optimal reimbursement policy. A for-profit monopoly selects a lower quality than a nonprofit supplier, and the socially optimal reimbursement rate with a nonprofit monopoly exceeds that with a for-profit monopoly. We establish that the optimal repayment policy is invariant to the introduction of competition by a for-profit high-quality supplier. Thus, market coverage is invariant to the introduction of competition, whereas consumers with a higher willingness to pay for quality are better off with competition.
Original language | English |
---|---|
Peer-reviewed scientific journal | The B.E. Journal of Economic Analysis & Policy |
Volume | 18 |
Issue number | 1 |
Pages (from-to) | 1-19 |
Number of pages | 19 |
ISSN | 2194-6108 |
DOIs | |
Publication status | Published - 23.01.2018 |
MoE publication type | A1 Journal article - refereed |
Keywords
- 511 Economics
- for-profit vs nonprofit healthcare provision
- competition in healthcare
- healthcare quality
- quality differentiation
- mixed duopoly