Provider Competition and Over-Utilization in Health Care

J. Boone, R.C.M.H. Douven

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This paper compares the welfare effects of three ways in which health care can be organized: no competition (NC), competition for the market (CfM) and competition on the market (CoM) where the payer offers the optimal contract to providers in each case. We argue that each of these can be optimal depending on the contracting environment of a speciality. In particular, CfM is optimal in a clinical situation where the payer either has contractible information on provider quality or can enforce cost efficient protocols. If such contractible information is not available NC or CoM can be optimal depending on whether patients react to decentralized information on quality differences between providers and whether payer’s and patients’ preferences are aligned.
Original languageEnglish
Place of PublicationTilburg
Number of pages45
Publication statusPublished - 22 Sept 2014

Publication series

NameCentER Discussion Paper


  • competition
  • health care
  • selective contracting
  • over-utilization
  • mechanism design


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