Journal
JOURNAL OF HEALTH ECONOMICS
Volume 26, Issue 1, Pages 149-170Publisher
ELSEVIER
DOI: 10.1016/j.jhealeco.2006.04.004
Keywords
gatekeeping; imperfect information; quality competition; product differentiation; price regulation
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We study the competitive effects of restricting direct access to secondary care by gatekeeping, focusing on the informational role of general practitioners (GPs). In the secondary care market there are two hospitals choosing quality and specialization. Patients, who are ex ante uninformed, can consult a GP to receive an (imperfect) diagnosis and obtain information about the secondary care market. We show that hospital competition is amplified by higher GP attendance but dampened by improved diagnosing accuracy. Therefore, compulsory gatekeeping may result in excessive quality competition and too much specialization, unless the mismatch costs and the diagnosing accuracy are sufficiently high. Second-best price regulation makes direct regulation of GP consultation redundant, but will generally not implement first-best. (c) 2006 Elsevier B.V. All rights reserved.
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