7(40)
The simulation results suggest that a 1% increase in competition is
followed by a decrease in the price for first-stage services in the range
0.02% to 0.09%. Relating this to the number of times the first-stage
services are performed on average during a year, the effects corresponds
to a redistribution from providers to patients of 336,000 SEK and 431,000
SEK respectively. The price decrease for follow-on services fall in the
range 0.01% to 0.07%, corresponding to a redistribution from providers
to patients in the range 282,000 SEK to 1.9 million SEK. Moreover, an
increase of one extra clinic within 1 kilometer would decrease prices by up
to 0.56% for the first-stage services and up 0.46% for follow-on services.
Thus, the policy simulations suggest that there is room for price decreases.
This implies that prices on the Swedish dental care market are set above
the competitive level and that increased competition would increase
consumer welfare by lowering prices.
The remainder of the paper is structured as follows: section 2 gives a
background to the empirical literature on competition in health care.
Section 3 gives a theoretical background to the empirical strategy. Section
4 gives an overview of dental care in Sweden and the data, section 5
describes the empirical strategy and, section 6 presents the results, a set
of robustness tests and policy simulations. In section 7, I conclude.
