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Competition and Waiting Times in Hospital Markets

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Abstract

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of regulated monopolies, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of incresed competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density redices waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferrable to regulated monopolies only if the (regulated) treatment price is sufficiently higher.

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File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2007/NIPE_WP_9_2007.PDF
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Bibliographic Info

Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 9/2007.

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Date of creation: 2007
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Handle: RePEc:nip:nipewp:9/2007

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Keywords: Hospitals; Competition; Waiting times;

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  18. repec:rus:hseeco:122140 is not listed on IDEAS
  19. Luigi Siciliani, 2005. "Does more choice reduce waiting times?," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 17-23.
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  23. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 577-615, May.
  24. Luigi Siciliani, 2008. "A note on the dynamic interaction between waiting times and waiting lists," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 639-647.
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