Imperfect Quality Information in a Quality-Competitive Hospital Market

Melbourne Institute Working Paper No. 05/09

Date: March 2009


Hugh Gravelle
Peter Sivey


We examine the implications of policies to improve information about the qualities of profit seeking duopoly hospitals which face the same regulated price and compete on quality. We show that if the hospital costs of quality are similar then better information increases the quality of both hospitals. However if the costs are sufficiently different improved information will reduce the quality of both hospitals.

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