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Propper C, (1996)
‘Market Structure and Prices: the Responses of Hospitals in the UK
National Health Service to competition’
Journal of Public Economics, 61 (3): 307-335
- Examines the pricing responses of NHS hospitals to competition, for
four medical specialties.
- Uses Department of Health pricing data to compare
prices charged (internally) by NHS hospitals to Divisional Health Authorities
and GP Fundholders.
- Uses the number of hospitals providing a given service within 30 minutes
drive of a hospital, and the number of patients treated in the specialty
by all NHS suppliers within this travel zone, as two measures of competition/market
size.
Key results:
- The results offer some support for the view that competition results
in lower prices in the NHS internal market.
- Market size appears to
have no effect on general surgery and orthopaedics prices, but does
have a negative effect on ENT and gynaecology prices.
- Sellers appear to be willing to mark up prices more where absolute
cost is low (gynaecology and ENT), perhaps reflecting responsiveness
to cash-constrained buyers.
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