Competition and Equity in Health Care Markets

Luigi Siciliani, Odd Rune Straume

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Pages (from-to)1-14
Number of pages14
JournalJournal of Health Economics
Volume64
Early online date21 Dec 2018
DOIs
Publication statusPublished - Mar 2019

Bibliographical note

© Elsevier Inc., 2018. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy.

Keywords

  • Gini coefficient
  • Health inequalities
  • Hospital competition
  • Quality

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