We examine whether a hospital's quality is affected by the quality provided by other hospitals in the same market. We first sketch a theoretical model with regulated prices and derive conditions on demand and cost functions which determine whether a hospital will increase its quality if its...

This paper uses Hierarchical Bayes Models to model and estimate spatial health effects in Germany. We combine rich individual-level household panel data from the German SOEP with administrative county-level data to estimate spatial county-level health dependencies. As dependent variable we use...