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Optimal quality regulation on the online health platform

Author

Listed:
  • Jianyue Liu

    (Jiangsu University)

  • Zhiqiang Ma

    (Jiangsu University)

Abstract

The information asymmetry of online healthcare services in China puts pressure on platforms to assure service efficacy. To prevent the online healthcare market failure and investigate optimal pricing and profits, we compared three quality regulation strategies: (1) no regulation; (2) exclusion: the platform excludes low-quality physicians; and (3) quality certification: the platform certifies high-quality physicians. Our analysis indicates that quality management improves the average quality of registered physicians, the number of users (patients and physicians), and social welfare. The quality certification strategy maximizes social welfare, whereas the exclusion strategy maximizes the scale of high-quality physicians and registered physicians’ average quality. Furthermore, the exclusion strategy can generate the highest profits for the platform only when patients have high enough quality preferences. Finally, the pricing level of healthcare platforms is influenced by network externality and certification investment. This study provides guiding principles for platform managers to regulate online healthcare services.

Suggested Citation

  • Jianyue Liu & Zhiqiang Ma, 2023. "Optimal quality regulation on the online health platform," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-17, December.
    • Handle: RePEc:spr:elmark:v:33:y:2023:i:1:d:10.1007_s12525-023-00670-3
    DOI: 10.1007/s12525-023-00670-3
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    More about this item

    Keywords

    Quality regulation; Online health platform; Network externality; Quality certification;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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