A Theoretical Model of Trade, Quality of Health Services and Signalling
01 Jan 2016-pp 279-293
TL;DR: A partial equilibrium framework is developed, where the producer of the health quality in South, referred to it as Multinational Health Service Provider (MNHSP), may enjoy some amount of monopoly power as this MNHSP has some special skills or it may introduce new quality of health services.
Abstract: Export of quality of health services to the foreign consumers is considered as a popular way of health trade in the South in recent years. Trade in quality of health services may suffer from the problem of quality signalling from the point of view of the patients of the North. Actually, patients of the North are misdirected by the quality of health services if proper signalling is not provided by the health quality producers of the South. Again signalling incurs some cost and hence production and export of high quality health services becomes unprofitable to the health quality producers of South. Hence, there exists a definite demand–supply mismatch regarding health quality. To capture the issue of quality signalling in the context of health services we want to develop a partial equilibrium framework, where the producer of the health quality in South, we refer to it as Multinational Health Service Provider (MNHSP), may enjoy some amount of monopoly power as this MNHSP has some special skills or it may introduce new quality of health services. The model shows that a movement from autarky to no autarky situation leads to, under reasonable conditions, a decline in signalling costs associated with high quality health services and also leads to an overall increase in demand for high quality health services in the South.
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TL;DR: In this paper, the authors present a model in which signaling is implicitly defined and explains its usefulness, in which the employer is not sure of the productive capabilities of an individual at the time he/she hires him.
Abstract: Publisher Summary This chapter discusses job market signaling. The term market signaling is not exactly a part of the well-defined, technical vocabulary of the economist. The chapter presents a model in which signaling is implicitly defined and explains its usefulness. In most job markets, the employer is not sure of the productive capabilities of an individual at the time he hires him. The fact that it takes time to learn an individual's productive capabilities means that hiring is an investment decision. On the basis of previous experience in the market, the employer has conditional probability assessments over productive capacity with various combinations of signals and indices. This chapter presents an introduction to Spence's more extensive analysis of market signaling.
12,195 citations
Book•
01 Jan 1988
TL;DR: The Theory of Industrial Organization as discussed by the authors is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas.
Abstract: The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas while working at an intuitive level To aid students at different levels, each chapter is divided into a main text and supplementary section containing more advanced material Each chapter opens with elementary models and builds on this base to incorporate current research in a coherent synthesis Tirole begins with a background discussion of the theory of the firm In part I he develops the modern theory of monopoly, addressing single product and multi product pricing, static and intertemporal price discrimination, quality choice, reputation, and vertical restraints In part II, Tirole takes up strategic interaction between firms, starting with a novel treatment of the Bertrand-Cournot interdependent pricing problem He studies how capacity constraints, repeated interaction, product positioning, advertising, and asymmetric information affect competition or tacit collusion He then develops topics having to do with long term competition, including barriers to entry, contestability, exit, and research and development He concludes with a "game theory user's manual" and a section of review exercises
9,777 citations
Posted Content•
TL;DR: In this paper, the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings, showing that as time passes and the number of informed consumers increases, signaling distortion lessens, resulting in a declining price profile.
Abstract: High and declining prices signal a high-quality product. High prices are the efficient means of signaling, because the consequent loss of sales volume is most damaging for lower-cost, lower-quality products. As time passes and the number of informed consumers increases, the signaling distortion lessens, resulting in a declining price profile. The prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings. Copyright 1991 by American Economic Association.
704 citations
TL;DR: In this paper, the authors consider a market for a product that can be produced at different quality levels, where consumers prefer higher to lower quality, but they may differ in their willingness to pay for quality.
Abstract: This paper is concerned with the provision of quality in markets in which consumers have only imperfect information. The analysis focuses on a market for a product that can be produced at different quality levels. All consumers prefer higher to lower quality, but they may differ in their willingness to pay for quality. Producers can produce any quality they like, but higher qualities are more costly to produce. The information in this market is imperfect in the sense that the exact quality chosen by a firm is known only to the firm itself; some information about the quality of a firm's product will, however, reach its potential customers, even if they do not make any special effort to acquire it. Within the framework suggested here, two conclusions are drawn. First, prices may serve as signals which exactly differentiate the available quality levels. That is, there exists a fulfilledexpectations equilibrium at which each price signals a unique quality level. Second, the pricesignals are not arbitrary. Each price-signal exceeds the marginal cost of producing the quality it signals. Such a mark-up depends on the nature of the product-specific information received by consumers—the poorer the information, the higher the mark-up.
486 citations
TL;DR: In their important work on international comparisons of national incomes and of comparative price structure, Kravis, Heston and Summers (i982, p. 8) have noted that services are much cheaper in the relative price structure of a typical poor country than in that of a rich country as discussed by the authors.
Abstract: In their important work on international comparisons of national incomes and of comparative price structure, Kravis, Heston and Summers (i982, p. 8) have noted that 'services are much cheaper in the relative price structure of a typical poor country than in that of a rich country'. This phenonomen has been documented now fairly systematically by the data, gathered under their guiding hand, of the United Nations International Comparison (ICP) which covers 34 countries. Table I reproduced from their work (I982), and Fig. I based on rows 3 and II-13, indeed show this tendencyfor the relationship between relative service prices and real per capita GDP in this Kravis-Heston-Summers 34-country 6-group sample. The tendency is strongly evident except for the intermediate groups III and IV.
406 citations