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Physician reimbursement, time-consistency and the quality of care
[Ärztevergütung, Zeitkonsistenz und die Qualität medizinischer Leistungen]

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  • Nuscheler, Robert

Abstract

We use a model of horizontal and vertical differentiation to study physicians’ incentives to provide quality in the physician-patient relationship under price regulation. If the price is the only regulatory variable, the social planner cannot implement the first-best policy. Moreover, the second-best policy is time inconsistent. Excess entry and firstbest efficient total quality provision is observed in the game without commitment. Allowing physicians to compete in prices does not solve the commitment problem since the competitive solution coincides with the time consistent outcome. In the median voter equilibrium the time consistency problem is more severe.

Suggested Citation

  • Nuscheler, Robert, 2002. "Physician reimbursement, time-consistency and the quality of care
    [Ärztevergütung, Zeitkonsistenz und die Qualität medizinischer Leistungen]
    ," Discussion Papers, Research Unit: Market Processes and Governance FS IV 02-16, Social Science Research Center Berlin (WZB).
  • Handle: RePEc:zbw:wzbmpg:fsiv0216
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    File URL: https://www.econstor.eu/bitstream/10419/51067/1/358748704.pdf
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    References listed on IDEAS

    as
    1. Ching-to Ma & James Burgess, 1993. "Quality competition, welfare, and regulation," Journal of Economics, Springer, vol. 58(2), pages 153-173, June.
    2. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
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    5. Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
    6. Jaskold Gabszewicz, J. & Thisse, J. -F., 1980. "Entry (and exit) in a differentiated industry," Journal of Economic Theory, Elsevier, vol. 22(2), pages 327-338, April.
    7. Gravelle, Hugh, 1999. "Capitation contracts: access and quality," Journal of Health Economics, Elsevier, vol. 18(3), pages 315-340, June.
    8. Neven, D. & Thisse, J-F., 1989. "On Quality And Variety Competition," CORE Discussion Papers 1989020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Franz Benstetter & Achim Wambach, 2001. "Strategic Interaction in the Market for Physician Services: The Treadmill Effect in a Fixed Budget System," CESifo Working Paper Series 427, CESifo Group Munich.
    10. Economides, Nicholas, 1993. "Quality variations in the circular model of variety-differentiated products," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 235-257, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nuscheler, Robert & Roeder, Kerstin, 2015. "Financing and funding health care: Optimal policy and political implementability," Journal of Health Economics, Elsevier, vol. 42(C), pages 197-208.
    2. Brekke, Kurt R. & Nuscheler, Robert & Straume, Odd Rune, 2007. "Gatekeeping in health care," Journal of Health Economics, Elsevier, vol. 26(1), pages 149-170, January.
    3. Nadja Kairies-Schwarz, 2014. "Altruism Heterogeneity and Quality Competition Among Healthcare Providers," Ruhr Economic Papers 0507, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. Kuhn, Michael & Ochsen, Carsten, 2009. "Demographic and geographic determinants of regional physician supply," Thuenen-Series of Applied Economic Theory 105, University of Rostock, Institute of Economics.
    5. Brekke, Kurt Richard & Cellini, Roberto & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and quality in regulated markets with sluggish demand," CEPR Discussion Papers 6938, C.E.P.R. Discussion Papers.
    6. Hiroshi Aiura & Yasuo Sanjo, 2010. "Privatization of local public hospitals: effect on budget, medical service quality, and social welfare," International Journal of Health Economics and Management, Springer, vol. 10(3), pages 275-299, September.
    7. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    8. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 444-469, June.
    9. Kurt R. Brekke & Roberto Cellini & Luigi Siciliani & Odd Rune Straume, 2008. "Competition and quality in regulated markets: a differential-game approach," Discussion Papers 08/05, Department of Economics, University of York.
    10. Fogelberg, Sara, 2013. "Effects of Competition between Healthcare Providers on Prescription of Antibiotics," Working Paper Series 949, Research Institute of Industrial Economics, revised 20 Nov 2014.
    11. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2017. "Hospital Mergers with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 597-627, July.
    12. Kurt R. Brekke & Robert Nuscheler & Odd Rune Straume, 2006. "Quality and Location Choices under Price Regulation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(1), pages 207-227, March.
    13. Dieter Pennerstorfer, 2014. "Price and Quality Competition in Spatial Markets. The Case of Camping Sites," WIFO Working Papers 466, WIFO.
    14. repec:zbw:rwirep:0507 is not listed on IDEAS
    15. 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.
    16. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2013. "Hospital Mergers: A Spatial Competition Approach," Discussion Paper Series in Economics 8/2013, Norwegian School of Economics, Department of Economics.
    17. Kairies-Schwarz, Nadja, 2014. "Altruism Heterogeneity and Quality Competition Among Healthcare Providers," Ruhr Economic Papers 507, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    18. Brekke, Kurt R. & Cellini, Roberto & Siciliani, Luigi & Straume, Odd Rune, 2010. "Competition and quality in health care markets: A differential-game approach," Journal of Health Economics, Elsevier, vol. 29(4), pages 508-523, July.
    19. repec:nip:nipewp:10/2014 is not listed on IDEAS
    20. Hugh Gravelle & Rita Santos & Luigi Siciliani & Rosalind Goudie, 2012. "Hospital Quality Competition Under Fixed Prices," Working Papers 080cherp, Centre for Health Economics, University of York.

    More about this item

    Keywords

    Economics of health care markets; time consistency; price regulation; quality competition; spatial competition;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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