Dynamic equilibrium in the hospital industry

Gautam Gowrisankaran, Robert J. Town

Research output: Contribution to journalArticle

33 Citations (Scopus)

Abstract

We present a dynamic model of the hospital industry in which nonprofit and for-profit hospitals coexist and compete and are differentiated by their objective functions, investment technologies, and taxation rates. In our model, patients differ by income and type of insurance coverage, and choose admission to their preferred hospital, while hospitals choose investment, entry, exit, and pricing strategies. We estimate the parameters of the model with aggregate data and a GMM procedure. We then use the model to examine the effects of changes in the Medicare reimbursement system, universal health-care coverage, and taxation of nonprofits.

Original languageEnglish (US)
Pages (from-to)45-74
Number of pages30
JournalJournal of Economics and Management Strategy
Volume6
Issue number1
StatePublished - Mar 1997
Externally publishedYes

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Taxation
Industry
Insurance
Health care
Dynamic models
Profitability
Dynamic equilibrium
Costs
Admission
Reimbursement
Income
Healthcare
Technology investment
Medicare
Objective function
Pricing strategy
Aggregate data
Entry and exit

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Management of Technology and Innovation
  • Strategy and Management
  • Economics and Econometrics

Cite this

Dynamic equilibrium in the hospital industry. / Gowrisankaran, Gautam; Town, Robert J.

In: Journal of Economics and Management Strategy, Vol. 6, No. 1, 03.1997, p. 45-74.

Research output: Contribution to journalArticle

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