Wednesday, 10/21/2020
13h15 I Online
Quality provision in hospital markets with demand
inertia: The role of patient expectations
Switching costs and persistent patient preferences generate
demand inertia and link current and future choices of hospital. Using a
model of hospital competition with demand inertia, we investigate the
effect of patient expectations (whether and how patients
anticipate the future) on quality provision. We consider three types of
expectations. Myopic patients choose a hospital based on current
variables alone, forward-looking but na ̈ıve patients take the future into
account but assume that quality remains constant, and forward-looking and
rational patients foresee the evolution of quality. We rank quality
provision and show that it is higher under na ̈ıve than myopic
expectations, while quality under rational expectations may be highest or
lowest. This result also holds for patients’ health gains, suggesting
that rationality does not always benefit patients. We also show that only
under rational expectations may quality be lower than in a market without
inertia and switching cost reductions beneficial.
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Looking forward to your attendance!
Núcleo de Investigação em Políticas Económicas e Empresariais (NIPE)
Escola de Economia e Gestão (EEG)
Universidade do Minho
Campus de Gualtar, 4710-057 Braga
Tel.: +351 253604518
Email: nipe@eeg.uminho.pt
Site: http://www.nipe.eeg.uminho.pt
