Does a hospital’s quality depend on the quality of other hospitals? : a spatial econometrics approach to investigating hospital quality competition

This research paper sets out a theoretical model with regulated prices which specifies conditions on demand and cost functions which determine whether a hospital will have higher quality when its rivals have higher quality. Findings show that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. Also, in those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%.

• Research paper
• CHE - publications