We study a repeated interaction between the purchaser of a health service and a nonaltruistic provider when some aspects of the service are unverifiable or verifiable. We formalize a Pay-for-Performance Relational Contract (P4P-RC) inducing the provider to deliver positive unverifiable quality. With the P4P-RC contract, the incentive of the provider to cheat on the unverifiable (non-contractible) quality makes the purchaser less willing to substitute away unverifiable with verifiable quality. Using political stability as a proxy for a stable interaction, we empirically test the relationship between the level of unverifiable quality and the permanence in charge of the Italian regional governments. We confirm the predictions of the theoretical model and find that unverifiable quality increases in contexts where regional governments are more stable.

This article examines health service provision and disparities in access, focusing on the interplay of tax deductions and the spatial correlation between health demand and private supply. We make two main contributions using detailed municipal-level data and a spatial counterfactual empirical approach. First, we uncover significant territorial variations in health tax expenditure, favouring northern Italian regions over southern ones. Second, we explore how proximity to private versus public health providers influences citizen spending behaviour, particularly in the Italian context. Our geographically weighted analysis reveals strong spatial non-stationarity, highlighting local factors affecting healthcare provision.

Public agencies often take long to pay their suppliers for the goods and services they procure. The payment delay can financially burden firms, affecting their participation and pricing decisions. In this paper, we study a reform in Chile that centralized procurement payments and substantially reduced payment delays for certain buyers in the health sector. We utilize a differences-in-differences design to evaluate its effects. Our preliminary findings suggest that reducing payment delay increased competition in procurement auctions by enhancing the participation of small firms, which is consistent with a model under which liquidity-constrained (smaller) firms face higher financial costs from delayed payments.