Quality provision in competitive health care markets: Individuals vs. teams

Johann Han, Nadja Kairies-Schwarz and Markus Vomhof

No 839, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We investigate the quality provision behavior and its implications for the occurrence of collusion in competitive health care markets where providers are assumed to be altruistic towards patients. For this, we employ a laboratory experiment with a health care market framing where subjects decide on the quality levels for one of three competing hospitals respectively. We vary whether quality decisions within hospitals are made by individuals or teams. Realized monetary patient benefits go to real patients outside the lab. We find that degrees of cooperation quickly converge towards negative values implying absence of collusion and patient centered quality choices. Moreover, hospitals treat qualities as strategic complements and adjust their quality choice in the same direction as their competitors. The response magnitude for team markets is weaker. This is driven by the non-cooperative, or altruistic teams which tend to set qualities strategically independent.

Keywords: quality competition; health care markets; team decisions; altruism; laboratory experiment (search for similar items in EconPapers)
JEL-codes: C92 D03 D43 D64 I11 L13 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cdm, nep-com, nep-exp and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:839

DOI: 10.4419/86788972

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