The regulation of health care providers’ payments when horizontal and vertical differentiation matter

摘要: This paper analyzes the regulation of payment schemes for health care providers competing in both quality and product differentiation their services. The regulator uses two instruments: a prospective per patient cost reimbursement rate. When can only use payment, optimal price involves trade-off between level provision horizontal differentiation. If this pure leads to underprovision overdifferentiation, mixed scheme allows improve allocation efficiency. is true relatively low patients’ transportation costs. We also show that if cannot commit rate, resulting dominate one with full commitment. occurs when or high enough, commitment solution either implies zero reimbursement.