Dynamic equilibrium in the hospital industry

Gautam Gowrisankaran, Robert J. Town

Research output: Contribution to journalArticle

35 Scopus citations

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
DOIs
StatePublished - Jan 1 1997
Externally publishedYes

ASJC Scopus subject areas

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

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