A dynamic model of quality competition with endogenous prices

Detalhes bibliográficos
Autor(a) principal: Cellini, Roberto
Data de Publicação: 2018
Outros Autores: Siciliani, Luigi, Straume, Odd Rune
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: https://hdl.handle.net/1822/65673
Resumo: We develop a dynamic model of price and quality competition in order to analyze the effects of competition on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Our model combines a differential-game approach with a Hotelling spatial competition framework, and our analysis applies in particular to industries such as long-term care, health care, child care and education. If providers (nursing homes, hospitals, schools, nurseries) use closed-loop decision rules, which imply strategic interaction over time, we show that, although increased competition leads to higher quality in the steady state, quality provision is nevertheless lower than under open-loop rules, and also suboptimally low from a welfare perspective. Thus, our analysis identifies dynamic strategic interaction between competing providers as a potential source of inefficiency in quality provision. (C) 2018 Elsevier B.V. All rights reserved.
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spelling A dynamic model of quality competition with endogenous pricesDifferential-gamesCompetitionQualityCiências Sociais::Economia e GestãoSocial SciencesWe develop a dynamic model of price and quality competition in order to analyze the effects of competition on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Our model combines a differential-game approach with a Hotelling spatial competition framework, and our analysis applies in particular to industries such as long-term care, health care, child care and education. If providers (nursing homes, hospitals, schools, nurseries) use closed-loop decision rules, which imply strategic interaction over time, we show that, although increased competition leads to higher quality in the steady state, quality provision is nevertheless lower than under open-loop rules, and also suboptimally low from a welfare perspective. Thus, our analysis identifies dynamic strategic interaction between competing providers as a potential source of inefficiency in quality provision. (C) 2018 Elsevier B.V. All rights reserved.- We thank two anonymous referees, Alessandra Buratto, Luca Grilli and Fabio Lamantia for valuable comments. The usual disclaimer applies. Odd Rune Straume acknowledges funding from COMPETE (ref. no. POCI-01-0145-FEDER-006683), with the FCT/MEC's (Fundacao para a Cieicia e a Tecnologia, I.P.) financial support through national funding and by the ERDF through the Operational Programme on Competitiveness and Internationalization - COMPETE 2020 under the PT2020 Partnership Agreement.Elsevier Science BVUniversidade do MinhoCellini, RobertoSiciliani, LuigiStraume, Odd Rune2018-092018-09-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/1822/65673engCellini, R., Siciliani, L., & Straume, O. R. (2018). A dynamic model of quality competition with endogenous prices. Journal of Economic Dynamics and Control, 94, 190-206.0165-18891879-174310.1016/j.jedc.2018.06.004https://www.sciencedirect.com/science/article/pii/S0165188918301672info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-07-21T12:42:13Zoai:repositorium.sdum.uminho.pt:1822/65673Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T19:39:24.593263Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv A dynamic model of quality competition with endogenous prices
title A dynamic model of quality competition with endogenous prices
spellingShingle A dynamic model of quality competition with endogenous prices
Cellini, Roberto
Differential-games
Competition
Quality
Ciências Sociais::Economia e Gestão
Social Sciences
title_short A dynamic model of quality competition with endogenous prices
title_full A dynamic model of quality competition with endogenous prices
title_fullStr A dynamic model of quality competition with endogenous prices
title_full_unstemmed A dynamic model of quality competition with endogenous prices
title_sort A dynamic model of quality competition with endogenous prices
author Cellini, Roberto
author_facet Cellini, Roberto
Siciliani, Luigi
Straume, Odd Rune
author_role author
author2 Siciliani, Luigi
Straume, Odd Rune
author2_role author
author
dc.contributor.none.fl_str_mv Universidade do Minho
dc.contributor.author.fl_str_mv Cellini, Roberto
Siciliani, Luigi
Straume, Odd Rune
dc.subject.por.fl_str_mv Differential-games
Competition
Quality
Ciências Sociais::Economia e Gestão
Social Sciences
topic Differential-games
Competition
Quality
Ciências Sociais::Economia e Gestão
Social Sciences
description We develop a dynamic model of price and quality competition in order to analyze the effects of competition on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Our model combines a differential-game approach with a Hotelling spatial competition framework, and our analysis applies in particular to industries such as long-term care, health care, child care and education. If providers (nursing homes, hospitals, schools, nurseries) use closed-loop decision rules, which imply strategic interaction over time, we show that, although increased competition leads to higher quality in the steady state, quality provision is nevertheless lower than under open-loop rules, and also suboptimally low from a welfare perspective. Thus, our analysis identifies dynamic strategic interaction between competing providers as a potential source of inefficiency in quality provision. (C) 2018 Elsevier B.V. All rights reserved.
publishDate 2018
dc.date.none.fl_str_mv 2018-09
2018-09-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv https://hdl.handle.net/1822/65673
url https://hdl.handle.net/1822/65673
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Cellini, R., Siciliani, L., & Straume, O. R. (2018). A dynamic model of quality competition with endogenous prices. Journal of Economic Dynamics and Control, 94, 190-206.
0165-1889
1879-1743
10.1016/j.jedc.2018.06.004
https://www.sciencedirect.com/science/article/pii/S0165188918301672
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier Science BV
publisher.none.fl_str_mv Elsevier Science BV
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron:RCAAP
instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
institution RCAAP
reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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