Can competition reduce quality?

Kurt Brekke (), Luigi Siciliani and Odd Rune Straume

No 05/2012, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We study the effect of competition on quality in markets such as health care, long-term care and education, when providers choose both prices and quality in a setting of spatial competition. We offer a novel mechanism whereby competition leads to lower quality. This mechanism relies on two key assumptions, namely that the providers are motivated and riskaverse. Our proposed mechanism can help explain several empirical findings of a negative effect of competition on quality.

Keywords: Quality and price competition; Motivated providers; Risk-averse providers (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L30 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Can Competition Reduce Quality? (2018)
Working Paper: Can Competition Reduce Quality? (2014)
Working Paper: Can competition reduce quality? (2014)
Working Paper: Can competition reduce quality? (2012)
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