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Imperfect information in a quality-competitive hospital market

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  • Gravelle, Hugh
  • Sivey, Peter

Abstract

We examine the implications of policies to improve information about the qualities of profit-seeking duopoly hospitals which face the same regulated price and compete on quality. We show that if hospital costs of quality are similar then better information increases the quality of both hospitals. However, if the costs are sufficiently different improved information will reduce the quality of both hospitals. Moreover, even when quality increases, better information may increase or decrease patient welfare depending on whether an ex post or ex ante view of welfare is taken.

Suggested Citation

  • Gravelle, Hugh & Sivey, Peter, 2010. "Imperfect information in a quality-competitive hospital market," Journal of Health Economics, Elsevier, vol. 29(4), pages 524-535, July.
  • Handle: RePEc:eee:jhecon:v:29:y:2010:i:4:p:524-535
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    References listed on IDEAS

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    Cited by:

    1. repec:oxf:wpaper:747 is not listed on IDEAS
    2. Bruce Hollingsworth & Anthony Scott & Yijuan Chen & Juergen Meinecke, 2012. "Do Healthcare Report Cards Cause Providers To Select Patients And Raise Quality Of Care?," Health Economics, John Wiley & Sons, Ltd., vol. 21, pages 33-55, June.
    3. Sorek Gilad, 2016. "Competition and Product Choice in Option Demand Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 785-805, April.
    4. Brekke, Kurt R. & Levaggi, Rosella & Siciliani, Luigi & Straume, Odd Rune, 2014. "Patient mobility, health care quality and welfare," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 140-157.
    5. Katz, Michael L., 2013. "Provider competition and healthcare quality: More bang for the buck?," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 612-625.
    6. Brekke, Kurt R. & Levaggi, Rosella & Siciliani, Luigi & Straume, Odd Rune, 2016. "Patient mobility and health care quality when regions and patients differ in income," Journal of Health Economics, Elsevier, vol. 50(C), pages 372-387.
    7. Chou, Shin-Yi & Deily, Mary E. & Li, Suhui & Lu, Yi, 2014. "Competition and the impact of online hospital report cards," Journal of Health Economics, Elsevier, vol. 34(C), pages 42-58.
    8. Shelegia, Sandro, 2012. "Imperfect information in a quality-competitive hospital market. A comment on Gravelle and Sivey," MPRA Paper 42121, University Library of Munich, Germany.
    9. Zhao, Xin, 2016. "Competition, information, and quality: Evidence from nursing homes," Journal of Health Economics, Elsevier, vol. 49(C), pages 136-152.
    10. Maija Halonen-Akatwijuka & Carol Propper, 2012. "Competition, Equity and Quality in Health Care," The Centre for Market and Public Organisation 12/296, Department of Economics, University of Bristol, UK.
    11. Chen, Yijuan, 2011. "Why are health care report cards so bad (good)?," Journal of Health Economics, Elsevier, vol. 30(3), pages 575-590, May.
    12. Huesmann, Katharina & Mimra, Wanda, 2015. "Quality provision and reporting when health care services are multi-dimensional and quality signals imperfect," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112849, Verein für Socialpolitik / German Economic Association.
    13. repec:nip:nipewp:09/2015 is not listed on IDEAS
    14. Yijuan Chen & Juergen Meinecke & Peter Sivey, 2013. "Can hospital waiting times be reduced by being published?," ANU Working Papers in Economics and Econometrics 2013-614, Australian National University, College of Business and Economics, School of Economics.
    15. Herresthal, C., 2017. "Performance-Based Rankings and School Quality," Cambridge Working Papers in Economics 1754, Faculty of Economics, University of Cambridge.
    16. Gilad Sorek, 2015. "Health Insurance and Competition in Health Care Markets," Auburn Economics Working Paper Series auwp2015-03, Department of Economics, Auburn University.
    17. Rune Stenbacka & Mihkel Tombak, 2014. "Optimal Co-Payment Policy In Health Care: Competition, Ownership Structure And Quality Provision," Working Papers 140004, Canadian Centre for Health Economics.
    18. Katharina Huesmann & Wanda Mimra, 2015. "Quality provision and reporting when health care services are multi-dimensional and quality signals imperfect," CER-ETH Economics working paper series 15/221, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    19. repec:spr:hecrev:v:7:y:2017:i:1:d:10.1186_s13561-017-0158-2 is not listed on IDEAS
    20. Hiroshi Aiura, 2013. "Inter-regional competition and quality in hospital care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 515-526, June.

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