ESSAYS ON THE INDUSTRIAL ORGANIZATION OF HEALTHCARE MARKETS IN CHINA

Abstract

This thesis consists of two chapters. The first chapter studies the general equilibrium effect of health insurance on healthcare expense. Specifically, we formulate and estimate a general equilibrium model to disentangle demand-side responses from supply-side responses in accounting for the equilibrium effect of health insurance on healthcare expense. We find that supply-side responses account for 71.62% of the increase in healthcare expense in urban areas, and demand-side responses for 61.55% in rural areas. The second chapter investigates the welfare consequence of hospital competition in the form of hospital contest. Specifically, we formulate and estimate a general equilibrium model of hospital contest. We find that, on average, the contest enhances individual welfare by 11.92% and increases government healthcare expense by 11.08%. We also calculate the marginal value of public funds of the contest for elders, which is 0.24, much lower than that of Medicare introduction (1.63).