Competition, Equity and Quality in Healthcare

Posted by D. Daniel Sokol

Maija Halonen-Akatwijuka, University of Bristol – Leverhulme Centre for Market and Public Organisation (CMPO) and Carol Propper, University of Bristol – Leverhulme Centre for Market and Public Organisation (CMPO); analyze Competition, Equity and Quality in Healthcare

ABSTRACT: In this paper we focus on the implications of consumer heterogeneity for whether competition will improve outcomes in health care markets. We show that competition generally favours the majority group as higher quality for the majority is an effective way to increase the quality signal and attract patients. A regulator who is concerned about equity may protect the minority group by not introducing competition. Alternatively, if the minority group is favoured by the providers under monopoly, competition can improve equity by forcing the providers to increase quality for the majority group.