SFB 303 Discussion Paper No. A - 578

Author: Bös, Dieter, and Gianni De Fraja
Title: Contracts for Health Services: Quality Versus Excess Capacity
Abstract: This paper studies the effects of non-contractability of investment on the choices made by a health authority and the hospital with which it contracts for the provision of a specific service. We deal with a situation where the parties must write a short-term contract, that is, where they are prevented from signing a contract before making their investment choices. For this reason inefficiency emerges: the service quality chosen by the hospital is too low, and the health authority relies too much on outside providers.
Keywords: Health Services, Incomplete Contracts
JEL-Classification-Number: I11, I18
Creation-Date: August 1998
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