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Quality competition, location choice, and ownership conversion in the healthcare market

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  • Takahara, Tsuyoshi

Abstract

This study analyzes the impact of ownership conversion on hospital outcomes, applying a Hotelling model with a private hospital operating between two public hospitals. The hospitals compete on treatment quality in the short term and can change locations in the long term. We show that privatization (municipalization) deteriorates (improves) the treatment quality of both types of hospitals in the short term; however, privatization (municipalization) can improve (deteriorate) the quality of both types of hospitals in the long term because changes in hospital locations in the long term alter the quality competition environment. We also analyze a case wherein a public hospital operates between two private hospitals as an extension. Our study is unique in that it endogenizes the location choice of the hospital, which previous studies have largely overlooked.

Suggested Citation

  • Takahara, Tsuyoshi, 2022. "Quality competition, location choice, and ownership conversion in the healthcare market," Economic Modelling, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:ecmode:v:115:y:2022:i:c:s0264999322002103
    DOI: 10.1016/j.econmod.2022.105964
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    Cited by:

    1. Levaggi, Laura & Levaggi, Rosella, 2023. "Competition in the provision of hospital care: Are mixed markets a valid alternative?," Economic Modelling, Elsevier, vol. 127(C).

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    More about this item

    Keywords

    Privatization; Hotelling model; Hospital competition;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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