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Title: Does the Market Correct Political Distortions? Evidence from Hospital Construction in Malaysia

Citation Type: Miscellaneous

Publication Year: 2023

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Abstract: Public and private firms coexist in various sectors within developing countries, yet how public firms affect private entrants remains unclear. This paper examines these interactions in the context of hospital construction in Malaysia, where public hospitals are subject to political influence, and interact with private hospitals. I combine newly digitized data encompassing six decades of elections, electoral and district maps, and hospital construction records to study how politics influence where public hospitals are built, and how private hospitals respond to public hospitals. I find that areas represented by Cabinet members are more likely to receive new public hospitals, creating spatial gaps in access. However, private hospitals do not fill these gaps, instead strategically agglomerating around politically-favored public hospitals. To quantify the gains from anticipating private entry when allocating public hospitals, I estimate a model of public allocation and private entry. I find that re-allocating public hospitals can significantly improve access to hospitals. These findings have implications for infrastructure policy and health care in markets that balance government and market provision.

Url: https://scholar.harvard.edu/sites/scholar.harvard.edu/files/kaishenlim/files/kailim_jmp.pdf

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Authors: Lim, Kai Shen

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Data Collections: IPUMS International

Topics: Health, Labor Force and Occupational Structure, Population Health and Health Systems

Countries: Malaysia