Optimal quality regulation on the online health platform

Jianyue Liu () and Zhiqiang Ma ()
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Jianyue Liu: Jiangsu University
Zhiqiang Ma: Jiangsu University

Electronic Markets, 2023, vol. 33, issue 1, No 49, 17 pages

Abstract: Abstract The information asymmetry of online healthcare services in China puts pressure on platforms to assure service efficacy. To prevent the online healthcare market failure and investigate optimal pricing and profits, we compared three quality regulation strategies: (1) no regulation; (2) exclusion: the platform excludes low-quality physicians; and (3) quality certification: the platform certifies high-quality physicians. Our analysis indicates that quality management improves the average quality of registered physicians, the number of users (patients and physicians), and social welfare. The quality certification strategy maximizes social welfare, whereas the exclusion strategy maximizes the scale of high-quality physicians and registered physicians’ average quality. Furthermore, the exclusion strategy can generate the highest profits for the platform only when patients have high enough quality preferences. Finally, the pricing level of healthcare platforms is influenced by network externality and certification investment. This study provides guiding principles for platform managers to regulate online healthcare services.

Keywords: Quality regulation; Online health platform; Network externality; Quality certification (search for similar items in EconPapers)
JEL-codes: C61 I11 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12525-023-00670-3

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