Imperfect information in a quality-competitive hospital market

▶ We model two hospitals which have regulated prices and compete on quality. ▶ We examine changes in the level of information about hospital quality. ▶ Increasing information will increase quality if hospital costs are similar. ▶ Increasing information will decrease quality if hospital costs are very different. ▶ Welfare effects depend on ex-ante or ex-post assumptions about quality information.