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Competition and equity in health care markets

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  • Siciliani, Luigi
  • Straume, Odd Rune

Abstract

We provide a model where hospitals compete on quality under fixed prices to investigate how hospital competition affects (i) quality differences between hospitals, and as a result, (ii) health inequalities across hospitals and patient severities. The answer to the first question is ambiguous and depends on factors related to both demand and supply of health care. Whether competition increases or reduces health inequalities depends on the type and measure of inequality. Health inequalities due to the postcode lottery are more likely to decrease if the marginal health gains from quality decrease at a higher rate, whereas health inequalities between high- and low-severity patients decrease if patient composition effects are sufficiently small. We also investigate the effect of competition on health inequalities as measured by the Gini and the Generalised Gini coefficients, and highlight differences compared to the simpler dispersion measures.

Suggested Citation

  • Siciliani, Luigi & Straume, Odd Rune, 2019. "Competition and equity in health care markets," Journal of Health Economics, Elsevier, vol. 64(C), pages 1-14.
  • Handle: RePEc:eee:jhecon:v:64:y:2019:i:c:p:1-14
    DOI: 10.1016/j.jhealeco.2018.12.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Hospital competition; Quality; Health inequalities; Gini coefficient;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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