Topics in public economics: Healthcare


This is based on recently published research papers focussing on a particular theme in Public Economics. Papers will be empirical or theoretical. We propose in 2020-2021 to focus on the economics of hospitals. An important theme in Health Economics that recently came to prominence. Everywhere in the world, hospitals pose interesting and specific problems, both in Economic Theory (in particular, Industrial Organization; Optimal Regulation, Incentives and Public Finance) and Applied Econometrics. 

Year 2020-2021: Health Economics — Hospitals

We will more specifically study the recent international literature on the following three themes.


1-      Hospital Governance (Profit vs Non-Profit) and Ownership (Private vs Public)
This is an important theme. Why are most hospitals not-for-profit institutions? We’ll study both the theory of nonprofit organizations and the empirical literature testing the relative performance of profit versus non-profit, and public versus private hospitals.

2-      Optimal Regulation of Hospitals: Investment, Pricing, Subsidies, Reimbursement Rules
Several forms of hospital funding and regulation coexist today in the world. It seems that all the existing systems have both advantages and shortcomings. We’ll study hospital regulation from the point of view of the theory of contracts and incentives.

3-      Hospital Competition.
What are the effects of increased competition on hospital costs, prices and the quality of service?  This question is still unsettled empirically. Again we’ll study both the theoretical arguments and empirical results on the usefulness of competition.


For a short introduction, see chapter 6 on hospitals in the following textbook,

Sloan, Frank A., and Chee-Ruey Hsieh (2016), Health Economics, second edition, MIT Press, Cambridge Massachusetts.

The following list of references (not a reading list) is just an indication and proposes some points of entry in the relevant literature.

Antel, J. J., R. L. Ohsfeldt and E. R. Becker (1995), “State Regulation and Hospital Costs”, Review of Economics and Statistics, 77(3), 416-422.

Bloom, N., C.  Propper, S. Seiler, et al. (2015), “The Impact of Competition on Management Quality: Evidence from Public Hospitals “, Review of Economic Studies, 82(2), 457-489.

Cuellar, A. E. and P. J.  Gertler (2006), “Strategic Integration of Hospitals and Physicians”, Journal of Health Economics, 25(1), 1-28.

David, G., R. C. Lindrooth, L. A. Helmchen et al. (2014), “Do Hospitals Cross-Subsidize?”, Journal of Health Economics, 37, 198-218.

Devereaux, P. J., P. T. L. Choi, C. Lachetti et al. (2002), « A Systematic Review and Meta-Analysis of Studies Comparing Mortality Rates of Private For-Profit and Private Not-For-Profit Hospitals”, Canadian Medical Association Journal, 166 (11), 1399-1406.

Dranove, D., M. Shanley and C. Simon (1992), “Is Hospital Competition Wasteful?”, Rand Journal of Economics, 23(2), 247-262.

Duggan, M. (2002), “Hospital Market Structure and the Behavior of Not-For-Profit Hospitals”, Rand Journal of Economics, 33(3), 433-446.

Eggleston, K., Y. C. Shen, J. Lau et al. (2008), “Hospital Ownership and Quality of Care: What Explains the Different Results in the Literature?”, Health Economics, 17(12), 1345-1362.

Gaynor, M, K. Ho and R. J. Town (2015), “The Industrial Organization of Health-Care Markets”, Journal of Economic Literature, 53(2), 235-284.

Ho, K. and A. Pakes (2014), “Hospital Choices, Hospital Prices and Financial Incentives to Physicians”, American Economic Review, 104 (2), 3841-3884.

Kessler, D. P. and M.  B. McClellan (2000), “Is Hospital Competition Socially Wasteful?”, Quarterly Journal of Economics, 115(2, 577-615.

Salkever, D.S. (2000), “Regulation of Prices and Investment in Hospitals in the United States”, in Newhouse, J. P. and A.J. Culyer, Handbook of Health Economics, vol 1B, 1490-1535, Elsevier North Holland, Amsterdam.

Sloan, F. A., G. A., Piccone, D. H. Taylor et al. (2001), “Hospital Ownership and Cost and Quality of Care: Is there a Dime’s Worth of Difference?”, Journal of Health Economics, 20(1), 1-21.