TY  - JOUR
AU  - Gaynor,Martin
TI  - What Do We Know About Competition and Quality in Health Care Markets?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12301
PY  - 2006
Y2  - June 2006
UR  - http://www.nber.org/papers/w12301
L1  - http://www.nber.org/papers/w12301.pdf
N1  - Author contact info:
Martin Gaynor
Heinz College
Carnegie Mellon University
4800 Forbes Avenue,,Room 3008
Pittsburgh, PA 15213-3890
Tel: 412/268-7933
Fax: 412/268-5338
E-Mail: mgaynor@cmu.edu
M2  - featured in NBER digest on 2006-06-19
AB  - The goal of this paper is to identify key issues concerning the nature of competition in health care markets and its impacts on quality and social welfare and to identify pertinent findings from the theoretical and empirical literature on this topic. The theoretical literature in economics on competition and quality, the theoretical literature in health economics on this topic, and the empirical findings on competition and quality in health care markets are surveyed and their findings assessed.
	Theory is clear that competition increases quality and improves consumer welfare when prices are regulated (for prices above marginal cost), although the impacts on social welfare are ambiguous. When firms set both price and quality, both the positive and normative impacts of competition are ambiguous. The body of empirical work in this area is growing rapidly.  At present it consists entirely of work on hospital markets. The bulk of the empirical evidence for Medicare patients shows that quality is higher in more competitive markets.  The empirical results for privately insured patients are mixed across studies.
ER  -