the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

valuing school quality using boundary discontinuities abstract existing research shows that house prices respond to local school quality as measured by average test scores however higher test scores could signal higher academic value added or higher ability more sought after intakes in our research we show that both school value added and student prior achievement linked to the background of children in schools affect households demand for education in order to identify these effects we improve the boundary discontinuity regression methodology by matching identical properties across admissions authority boundaries by allowing for boundary effects and spatial trends by re weighting our data towards transactions that are closest to district boundaries by eliminating boundaries that coincide with major geographical features and by submitting our estimates to a number of novel falsification tests our results survive this battery of tests and show that a one standard deviation change in either school average value added or prior achievement raises prices by around 3

the effects of regulation and competition in the nhs internal market the case of general practice fundholder prices the 1989 reforms of the uk national health service introduced competition in supply within a tightly regulated framework the paper examines whether this competition affects the prices posted by sellers of medical services we argue that despite regulation market forces may have an impact on price we test this using the posted prices for one of the two types of buyer general practice fundholders we find the regulatory rules are not observed and some evidence of the impact of market forces on price

financial literacy and participation in the derivatives markets we set out in this study to determine whether individuals with higher levels of financial literacy are more likely to be active participants in the derivatives markets our empirical results based upon an official national survey undertaken by the financial supervisory commission of taiwan reveal that even after controlling for stock market participation rates financial literacy represents a significant benefit to individuals since it helps them to lower the entry barriers to purchasing complex derivatives products we also find that household wealth gender residential location and diverse sources of information have significant effects on participation rates in the derivatives markets furthermore when taking into consideration issues of accessibility or measurement error the positive effects of financial literacy on derivatives market participation are found to remain largely unchanged

market structure and prices the responses of hospitals in the uk national health service to competition abstract the internal market reforms to the uk national health service nhs are a model adopted in many health care systems they introduce competition in supply little is known about the impact of these reforms this paper examines the pricing responses of nhs suppliers to competition the incentives of the reformed system are analysed these indicate that prices should differ between buyers and markets these hypotheses are tested using data on spot market transactions between hospitals and health care buyers the results indicate considerable price variability but offer broad support for the hypotheses

monopolistic competition when price and quality are imperfectly observable consider the symmetric equilibrium of a monopolistically competitive industry in which manufacturers select price and quality to maximize expected profit and consumers maximize utility by conducting costly search among sellers using an optimal sequential search rule consumers search among sellers because i each consumer idiosyncratically evaluates each seller s quality and ii a retailing sector generates variation in the prices consumers pay consumers are handicapped in their search because their observations of firms price and quality levels are noisy an improvement in price information is represented by an increase in the precision with which consumers observe sellers prices similarly an improvement in quality information is represented by an increase in precision with which consumers observe sellers quality levels an improvement of either type of information may increase or decrease welfare the perverse case in which improved price information decreases welfare occurs when price competition among firms becomes so intense relative to quality competition that firms select severely suboptimal levels of quality a consumer searching among monopolistically competitive sellers may have difficulty accurately observing the price and quality of each seller s product he must infer from his prior beliefs and noisy observations the true values of the product s price and quality attributes we show that increasing the precision with which consumers observe an attribute of a product makes the inference problem easier and causes the demand the seller faces with respect to that attribute to become more elastic the equilibrium level of that attribute changes accordingly and since the equilibrium levels of price and quality interact the equilibrium level of the other attribute changes as well these equilibrium effects can be perverse in two ways first if the precision of quality observation is fixed then improvement in the precision of price observation can reduce welfare the chain of causation is this increasing the precision of price observation causes price to fall the resulting smaller price cost margin induces sellers to reduce quality de

using regional variation in wages to measure the effects of the federal minimum wage the imposition of a national minimum wage standard provides a natural experiment in which the treatment effect varies across states depending on the fraction of workers initially earning less than the new minimum the author exploits this fact to evaluate the effect of the april 1990 increase in the federal minimum wage on teenagers wages employment and school enrollment comparisons of grouped and individual state data confirm that the rise in the minimum wage increased teenagers wages there is no evidence of corresponding losses in teenage employment or changes in teenage school enrollment

equality efficiency and market fundamentals the dynamics of international medical care reform public opinion surveys uniformly show low support for medical care systems in developed countries the longstanding conflict between equal access to care and efficient service provision partly explains this dissatisfaction but the trade off is particularly acute in medical care as new technologies developed over time have increased the cost of care and made the equity commitment even more expensive countries first dealt with rising costs by maintaining equal access and restricting total spending efficiency suffered however as a result many countries are considering a move away from spending controls and toward incentive based medical care reform

does hospital competition harm equity evidence from the english national health service increasing evidence shows that hospital competition under fixed prices can improve quality and reduce cost concerns remain however that competition may undermine socio economic equity in the utilisation of care we test this hypothesis in the context of the pro competition reforms of the english national health service progressively introduced from 2004 to 2006 we use a panel of 32 482 english small areas followed from 2003 to 2008 and a difference in differences approach the effect of competition on equity is identified by the interaction between market structure small area income deprivation and year we find a negative association between market competition and elective admissions in deprived areas the effect of pro competition reform was to reduce this negative association slightly suggesting that competition did not undermine equity

product quality and competition evidence from the broadband industry abstractaccess to high quality broadband internet is important in many different respects such as in communication education commerce and information acquisition we investigate the relationship

does competition from private surgical centres improve public hospitals performance evidence from the english national health service abstract this paper examines the impact of a government programme which facilitated the entry of for profit surgical centres to compete against incumbent national health service hospitals in england we examine the impact of competition from these surgical centres on the efficiency measured by pre surgery length of stay for hip and knee replacement patients and case mix of incumbent public hospitals we exploit the fact that the government chose the broad locations where these surgical centres independent sector treatment centres or istcs would be built based on local patient waiting times not length of stay or clinical quality to construct treatment and control groups that are comparable with respect to key outcome variables of interest using a difference in difference estimation strategy we find that the government facilitated entry of surgical centres led to shorter pre surgery length of stay at nearby public hospitals however these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker this paper highlights a potential trade off that policymakers face when they promote competition from private for profit firms in markets for the provision of public services

the impact of hospital market structure on patient volume average length of stay and the cost of care a variety of recent proposals rely heavily on market forces as a means of controlling hospital cost inflation sceptics argue however that increased competition might lead to cost increasing acquisitions of specialized clinical services and other forms of non price competition as means of attracting physicians and patients using data from hospitals in 1972 we analyzed the impact of market structure on average hospital costs measured in terms of both cost per patient and cost per patient day under the retrospective reimbursement system in place at the time hospitals in more competitive environments exhibited significantly higher costs of production than did those in less competitive environments

the industrial organization of health care markets the u s health care sector is large and growing health care spending in 2011 amounted to 2 7 trillion and 18 percent of gdp approximately half of health care output is allocated via markets in this paper we analyze the industrial organization literature on health care markets focusing on the impact of competition on price quality and treatment decisions for health care providers and health insurers we conclude with a discussion of research opportunities for industrial organization economists including opportunities created by the u s patient protection and affordable care act

financial literacy and consumer credit portfolios we use survey data from a sample of uk households to analyse the relation ship between financialliteracy and consumer credit portfolios we show that individ uals who borrow on consumer credit exhibit worse financial literacy than those who do not borrowers with poor financialliteracy hold higher shares of high cost credit such as home collected credit mail order catalogue debt and payday loans than those with higher literacy we also show that individuals with poor financialliteracy are more likely to lack confidence when interpreting credit terms and to exhibit confusion over financialconcepts they are also less likely to engage in behaviour which might help them to improve their awareness of the credit market

the price ain t right hospital prices and health spending on the privately insured we use insurance claims data for 27 6 percent of individuals with private employer sponsored insurance in the us between 2007 and 2011 to examine the variation in health spending and in hospitals transaction prices we document the variation in hospital prices within and across geographic areas examine how hospital prices influence the variation in health spending on the privately insured and analyze the factors associated with hospital price variation four key findings emerge first health care spending per privately insured beneficiary varies by a factor of three across the 306 hospital referral regions hrrs in the us moreover the correlation between total spending per privately insured beneficiary and total spending per medicare beneficiary across hrrs is only 0 14 second variation in providers transaction prices across hrrs is the primary driver of spending variation for the privately insured whereas variation in the quantity of care provided across hrrs is the primary driver of medicare spending variation consequently extrapolating lessons on health spending from medicare to the privately insured must be done with caution third we document large dispersion in overall inpatient hospital prices and in prices for seven relatively homogenous procedures for example hospital prices for lower limb mris vary by a factor of twelve across the nation and on average two fold within hrrs finally hospital prices are positively associated with indicators of hospital market power even after conditioning on many demand and cost factors hospital prices in monopoly markets are 15 3 percent higher than those in markets with four or more hospitals

the changing role of government in financing health care an international perspective this paper explores the changing role of government involvement in health care financing policy outside the united states it provides a review of the economics literature in this area to elucidate the implications of recent policy changes on efficiency costs and quality our review reveals that there has been some convergence in policies adopted across countries to improve financing incentives and encourage efficient use of health services in the case of risk pooling all countries with competing pools experience similar difficulties with selection and are adopting more sophisticated forms of risk adjustment in the case of hospital competition the key drivers of success appear to be what is competed on and measurable rather than whether the system is public or private in the case of both the success of performance related pay for providers and issues resulting from wait times evidence differs within and across jurisdictions however the evidence does suggest that some governments have effectively reduced wait times when they have chosen explicitly to focus on achieving this goal many countries are exploring new ways of generating revenues for health care to enable them to cope with significant cost growth but there is little evidence to suggest that collection mechanisms alone are effective in managing the cost or quality of care jel h51 i11 i18

financial incentives in health new evidence from india s janani suraksha yojana this paper studies the health effects of one of the world s largest demand side financial incentive programmes india s janani suraksha yojana our difference in difference estimates exploit heterogeneity in the implementation of the financial incentive programme across districts we find that cash incentives to women were associated with increased uptake of maternity services but there is no strong evidence that the jsy was associated with a reduction in neonatal or early neonatal mortality the positive effects on utilisation are larger for less educated and poorer women and in places where the cash payment was most generous we also find evidence of unintended consequences the financial incentive programme was associated with a substitution away from private health providers an increase in breastfeeding and more pregnancies these findings demonstrate the potential for financial incentives to have unanticipated effects that may in the case of fertility undermine the programme s own objective of reducing mortality

do financial incentives trump clinical guidance hip replacement in england and scotland following devolution in 1999 england and scotland s national health services diverged resulting in major differences in hospital payment england introduced a case payment mechanism from 2003 4 while scotland continued to pay through global budgets we investigate the impact this change had on activity for hip replacement we examine the financial reimbursement attached to uncemented hip replacement in england which has been more generous than for its cemented counterpart although clinical guidance from the national institute for clinical excellence recommends the later in scotland this financial differential does not exist we use a difference in difference estimator using scotland as a control to test whether the change in reimbursement across the two countries had an influence on treatment our results indicate that financial incentives are directly linked to the faster uptake of the more expensive uncemented hip replacement in england which ran against the clinical guidance

does competition between hospitals improve the quality of care hospital death rates and the nhs internal market payer driven competition has been widely advocated as a means of increasing efficiency in health care markets the 1990s reforms to the uk health service followed this path we examine whether competition led to better outcomes for patients as measured by death rates after treatment following heart attacks using data that until 1999 was not publicly available in any form on hospital level death rates we find that the relationship between competition and quality of care appears to be negative greater competition is associated with higher death rates controlling for patient mix and other observed characteristics of the hospital and the catchment area for its patients however the estimated impact of competition is small jel classification i1 l8 h4

competition and the incentive to produce high quality previous literature indicates that when quality is a choice variable firms have an incentive to produce high quality to maintain their reputations with consumers the strategic interaction among firms and competition for market share is not considered this paper finds that when firms compete for market share perfect equilibria in which firms produce high quality goods need not exist competition for customers can eliminate the price premium needed to induce firms to maintain a reputation for high quality production in this case economists and policy analysts should pay greater attention to the interaction among firms and the institutions such as professional associations that structure interfirm relations when considering whether firms have an incentive to produce high quality goods

the impact of competition on management quality evidence from public hospitals in this paper we examine the causal impact of competition on management quality we analyze the hospital sector where geographic proximity is a key determinant of competition and english public hospitals where political competition can be used to construct instrumental variables for market structure since almost all major english hospitals are government run closing hospitals in areas where the governing party has a small majority is rare due to fear of electoral punishment we find that management quality measured using a new survey tool is strongly correlated with financial and clinical outcomes such as survival rates from emergency heart attack admissions ami more importantly we find that higher competition as indicated by a greater number of neighboring hospitals is positively correlated with increased management quality and this relationship strengthens when we instrument the number of local hospitals with local political competition adding another rival hospital increases the index of management quality by one third of a standard deviation and leads to a 10 7 reduction in heart attack mortality rates

competition among hospitals the traditional view of hospital competition has posited that hospitals compete primarily along quality dimensions in the form of fancy equipment to attract admitting physicians and pleasant surroundings to entice patients price competition among hospitals is thought to be non existent this paper estimates the effects of various hospital market characteristics on hospital prices and expenses in an attempt to determine the form of hospital competition the results suggest that both price and quality competition are greater in markets that are less concentrated although the net effect of the two on prices is insignificant it appears therefore that despite important distortions hospital markets are not immune to standard competitive forces

who chooses annuities an experimental investigation of the role of gender framing and defaults research suggests that women are more risk averse and less financially literate than men as evidenced by their choice of less risky asset investments we contribute to the literature by focusing on the role of gender in an increasingly important financial decision facing individuals at retirement the choice between purchasing an annuity in this case a fixed immediate lifetime annuity or investing their savings on their own by using a controlled experiment we eliminate the role of adverse selection and unfair annu ity pricing and are able to focus specifically on gender we also explore the role of defaults and framing and whether women react differently to these features we find that women are more likely to choose the annuity and this is only partly explained by differences in risk aversion and financial literacy furthermore biases in a five minute presentation of information signifi cantly affect choices in ways that differ across men and women

does hospital competition save lives evidence from the english nhs patient choice reforms recent substantive reforms to the english national health service expanded patient choice and encouraged hospitals to compete within a market with fixed prices this study investigates whether these reforms led to improvements in hospital quality we use a difference in difference style estimator to test whether hospital quality measured using mortality from acute myocardial infarction improved more quickly in more competitive markets after these reforms came into force in 2006 we find that after the reforms were implemented mortality fell i e quality improved for patients living in more competitive markets our results suggest that hospital competition can lead to improvements in hospital quality

is hospital competition socially wasteful we study the consequences of hospital competition for medicare beneficiaries heart attack care from 1985 to 1994 we examine how relatively exogenous determinants of hospital choice such as travel distances influence the competitiveness of hospital markets and how hospital competition interacts with the influence of managed care organizations to affect the key determinants of social welfare expenditures on treatment and patient health outcomes in the 1980s the welfare effects of competition were ambiguous but in the 1990s competition unambiguously improves social welfare increasing hmo enrollment over the sample period partially explains the dramatic change in the impact of hospital competition

is hospital competition wasteful stable url http links jstor org sici sici 0741 6261 28199222 2923 3a2 3c247 3aihcw 3e2 0 co 3b2 zthe rand journal of economics is currently published by the rand corporation your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals rand html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgfri jan 4 14 10 49 2008

does market size matter for charities abstract we analyze implications of market size for market structure in the charity sector while a standard model of oligopolistic for profit competition predicts a positive relationship between market size and firm size our analogous model of competition between prosocially motivated charities predicts no such correlation if charities are biased towards their own provision a positive association between market size and provider size can arise we examine these predictions empirically for six different local charity markets our empirical findings suggest that charities do not solely pursue prosocial objectives and that increased competition in the charity sector can lead to rationalization in provision

why do so few hold stocks the authors investigate why 75 percent of u s households do not hold stocks despite the equity premium and predictions of expected utility models the question is relevant for privatization asset pricing and tax progressivity issues they show that risk aversion per se heterogeneity of beliefs habit persistence time nonseparability and quantity constraints on borrowing do not account for the phenomenon a wedge between borrowing and lending rates and minimum investment requirements are plausible but empirically weak factors more promising explanations are inertia and departures from expected utility maximization there is also qualified support for nondiversifiable income risk as a contributing factor copyright 1995 by royal economic society

can governments do it better merger mania and hospital outcomes in the english nhs the literature on mergers between private hospitals suggests that such mergers often produce little benefit despite this the uk government has pursued an active policy of hospital mergers arguing that such consolidations will bring improvements for patients we examine whether this promise is met we exploit the fact that between 1997 and 2006 in england around half the short term general hospitals were involved in a merger but that politics means that selection for a merger may be random with respect to future performance we examine the impact of mergers on a large set of outcomes including financial performance productivity waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals

free to choose reform choice and consideration sets in the english national health service choice in public services is controversial we exploit a reform in the english national health service to assess the effect of removing constraints on patient choice we estimate a demand model that explicitly captures the removal of the choice constraints imposed on patients we find that post removal patients became more responsive to clinical quality this led to a modest reduction in mortality and a substantial increase in patient welfare the elasticity of demand faced by hospitals increased substantially post reform and we find evidence that hospitals responded to the enhanced incentives by improving quality this suggests greater choice can raise quality

dynamic hospital competition under rationing by waiting times abstract we develop a dynamic model of hospital competition where i waiting times increase if demand exceeds supply ii patients choose a hospital based in part on waiting times and iii hospitals incur waiting time penalties we show that whereas policies based on penalties will lead to lower waiting times policies that promote patient choice will instead lead to higher waiting times these results are robust to different game theoretic solution concepts designs of the hospital penalty structure and patient utility specifications furthermore waiting time penalties are likely to be more effective in reducing waiting times if they are designed with a linear penalty structure but the counterproductive effect of patient choice policies is smaller when penalties are convex these conclusions are partly derived by calibration of our model based on waiting times and elasticities observed in the english nhs for a common treatment cataract surgery

an assessment of labour s record on health and healthcare this paper examines the record of the 1997 2010 labour administration on health and healthcare it begins by outlining the policies adopted by the administration with respect to the delivery of healthcare services and population health it then presents a two part assessment in the first part we examine the performance of the administration with respect to improvements in healthcare and population health in the second part we examine the healthcare policy record copyright 2013 oxford university press

competition and equity in health care markets we provide a model where hospitals compete on quality under fixed prices to investigate how hospital competition affects i quality differences between hospitals and as a result ii health inequalities across hospitals and patient severities the answer to the first question is ambiguous and depends on factors related to both demand and supply of health care whether competition increases or reduces health inequalities depends on the type and measure of inequality health inequalities due to the postcode lottery are more likely to decrease if the marginal health gains from quality decrease at a higher rate whereas health inequalities between high and low severity patients decrease if patient composition effects are sufficiently small we also investigate the effect of competition on health inequalities as measured by the gini and the generalised gini coefficients and highlight differences compared to the simpler dispersion measures

structural modernization and development traps an empirical approach in this paper we analyse economic development through the lenses of a newly developed index the structural modernization index this index combines two dimensions that have been widely invoked as prime drivers of economic development namely structural change and technological catch up for each country the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern part of the economy and weighs this relative productivity by the employment share of those activities in the total labour force in doing so it combines a technological dimension relative productivity and a structural dimension the size of the modern sector thus providing a concise measure of the degree of modernity of an economy the index is calculated for a large sample of countries over a long time span significant efforts have been made to put together a dataset with international comparable data on value added and employment disaggregated by sectors for 100 countries covering the period 1950 2009 the estimates are used to explore the relationship between structural modernization and the so called poverty and middle income traps in analysing this relationship the interactive nature of structural change and technological catch up is stressed important insights are obtained regarding the nature of low and middle income development traps finally the usefulness of this new index is illustrated when studying the diverse structural trajectories of a set of countries that can be taken as examples of success and failure in the process of economic development

investment in financial literacy and saving decisions abstract we present an intertemporal consumption model of investment in financial literacy consumers benefit from such investment because financial literacy allows them to increase the returns on wealth since literacy depreciates over time and has a cost in terms of current consumption the model delivers an optimal investment in literacy furthermore literacy and wealth are determined jointly and are positively correlated over the life cycle the model drives our empirical approach to the analysis of the effect of financial literacy on wealth and saving and indicates that the stock of financial literacy early in life is a valid instrument in the regression of wealth on financial literacy using microeconomic and aggregate data we find strong support for the model s predictions