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2014 CSR Impact on Hospital Duopoly with Price and Quality Competition
Youguang Xu
J. Appl. Math. 2014(SI10): 1-12 (2014). DOI: 10.1155/2014/152060

Abstract

This paper investigates the impact of corporate social responsibility (CSR) on hospital duopoly with price and quality competition. A CSR hospital is defined in this paper that cares about not only the profit but also the patient benefit. We start our analysis by establishing a two-stage Hotelling model with and without CSR. Results indicate that privatization mechanism may not be the best way of improving medical quality. Competition between hospitals with zero-CSR would lower the equilibrium qualities compared to the first-best level. So the coexistence of a public (more accurately, partial public) and a private hospital might be more efficient than a private-private hospital duopoly. During the competition with CSR in price and quality, social welfare level acts in accordance with an inverted U-shaped trajectory as CSR degree increases. The main reason lies in tha fact that optimal degree of CSR is determined by the trade-off between the benefit of quality improvement and the cost of quality investment. Numerical simulation shows that the optimal degree of CSR is less than a third.

Citation

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Youguang Xu. "CSR Impact on Hospital Duopoly with Price and Quality Competition." J. Appl. Math. 2014 (SI10) 1 - 12, 2014. https://doi.org/10.1155/2014/152060

Information

Published: 2014
First available in Project Euclid: 1 October 2014

zbMATH: 07010555
Digital Object Identifier: 10.1155/2014/152060

Rights: Copyright © 2014 Hindawi

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Vol.2014 • No. SI10 • 2014
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