Regulation and Hospital Competition in a Medical Arms Race
AbstractThis paper provides a model of hospital competition to explain the "medical arms race", i.e. the tendency of hospitals to over-invest in specialized services. The model examines how hospitals gain an edge ("prestige effect") by adopting a larger complement of services than their rivals. In a medical arms race, ,arket outcomes are made worse than what results under free entry with Cournot interaction. Simulations of equilibria identify cost and demand conditions that lead to the over-provision of services.
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Bibliographic InfoPaper provided by Department of Economics, Florida State University in its series Working Papers with number 1996_09_01.
Length: 29 pages
Date of creation: 1996
Date of revision:
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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