The Economics of Medical Tourism A Case Study for the USA and India
AbstractThe objective of this paper is to demonstrate a simple Ricardian model of international trade for health care industries of the USA and India. Our motivation is to illustrate that specialization and free trade result in gains from international trade. We will shed some light on the economics of outbound as well as inbound medical tourism. By adopting the model of comparative advantage to the costs of medical surgeries, we will show that trade between our two model countries – India and the USA – is beneficial to both of them. By specializing on the type of surgery they are most efficient in producing, it will enhance the well being of both nations. Numerical examples and graphical presentations help to support our arguments. In addition, we will lift some of the more restrictive assumptions. By including transportation costs, barriers of trade as well as a larger variety of surgical services, the central message of the beneficial effect of specialization still remains, even though the general picture becomes slightly blurred. There is evidence for support of a more multi-polar international system of trade in medical services.
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This chapter was published in: György Kadocsa (ed.) , , pages 123-142, 2010.
This item is provided by Óbuda University, Keleti Faculty of Business and Management in its series Proceedings-8th International Conference on Mangement,Enterprise and Benchmarking (MEB 2010) with number 123-142.
medical tourism; Ricardian model; comparative advantage; international trade; gains from trade;
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