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Competition and waiting times in hospital markets

Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune
Working paper
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URI
http://hdl.handle.net/11250/163038
Date
2007-03
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  • Discussion papers (SAM) [578]
Abstract
This paper studies the impact of hospital competition on waiting times. We use

a Salop-type model, with hospitals that differ in (geographical) location and, potentially,

waiting time, and two types of patients; high-benefit patients who choose

between neighbouring hospitals (competitive segment), and low-benefit patients who

decide whether or not to demand treatment from the closest hospital (monopoly segment).

Compared with a benchmark case of regulated monopolies, we find that hospital

competition leads to longer waiting times in equilibrium if the competitive segment

is sufficiently large. Given a policy regime of hospital competition, the effect of increased

competition depends on the parameter of measurement: Lower travelling costs

increase waiting times, higher hospital density reduces waiting times, while the effect

of a larger competitive segment is ambiguous. We also show that, if the competitive

segment is large, hospital competition is socially preferrable to regulated monopolies only if the (regulated) treatment price is sufficiently high.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2007:13

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