Imperfect information in a quality-competitive hospital market.
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.
Gravelle
Hugh
H
National Primary Care Research and Development Centre, Centre for Health Economics, University of York, United Kingdom. hg8@york.ac.uk
Sivey
Peter
P
D001294:Attitude to Health; D004465:Economic Competition; D005161:Facility Regulation and Control; D006291:Health Policy; D006302:Health Services Research; D017721:Hospital Costs; D006779:Hospitals, Public / Q000191:economics / Q000592:standards*; D006801:Humans; D033181:Information Dissemination; D017059:Models, Econometric; D011787:Quality of Health Care / Q000191:economics; D012946:Social Welfare