Over at NICS, Scott Gibson writes that researchers are using XSEDE supercomputing resources to study the complex economics of industrial organization and contract theory. While these two fields have largely been considered separately, investigating these forces and their effect on quality of service in healthcare is the focus of researchers Victor Zhorin of the Computation Institute at the University of Chicago and Robert Townsend of the Massachusetts Institute of Technology Department of Economics.
Enhancing market competition requires a close look at the industries and their contracts with customers. But, as Zhorin points out, connecting industrial organization and contract theory is complicated. He explains that the project’s simulation model encompasses several layers, or building blocks, from what takes place on the micro level between the financial or insurance firms and households, to service providers from those industries that are engaged in strategic interaction and competition over the markets populated by the people on the micro level. “At each layer, a different computational method with a different optimization approach is used to make it possible to compute both the equilibrium and out-of-equilibrium outcomes,” Zhorin says.
A key aspect of Zhorin and Townsend’s research is examining economies that are in transition and have companies operating under imperfect competition, with consideration of both geography and customer preferences for particular products. And the results, Zhorin says, are directly applicable to service-oriented industries, including medical insurance and financial services.
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