Economics at your fingertips  

A note on hospitals incentives to collude on low quality in a spatial context

Kai Andree () and Mike Schwan ()

European Economic Letters, 2013, vol. 2, issue 2, 62-65

Abstract: This paper analyzes the incentive for a cartel agreement between hospitals. For this purpose we extend a quality competition model developed by Montefiori (2005). We investigate that collusion on a low provided quality level will lead to higher profits for both hospitals. Therefore both hospitals benefit from an agreement. Further we can see if one hospital breaks the cartel rules, while the other stick to the agreement, the defrauding hospital can make additional profits. In addition we study the profits under an infinite time horizon. Under a given specific strategy played by the hospitals, we obtain a particular discount factor under which an agreement still holds.

Keywords: Collusion; Quality competition; Duopoly (search for similar items in EconPapers)
JEL-codes: D43 I11 L44 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

European Economic Letters is currently edited by Mike Taylor

More articles in European Economic Letters from European Economics Letters Group
Bibliographic data for series maintained by Mike taylor (). This e-mail address is bad, please contact .

Page updated 2018-08-04
Handle: RePEc:ris:eueclt:0016