A concept of optimal quality and an application

Abstract

This paper develops a concept (and a model) of optimal quality so as to determine the level of quality that maximizes both customer's satisfaction and firm's profit. The concept, as developed in the paper, is meant to represent a benchmark for policies aiming to help achieve the optimum for both customers and firms. The paper presents an application of this concept in a private sector-dominated subset of the Turkish healthcare sector and explores the actual and optimal quality-differences in the sector in question. It turns out that actual and optimal levels of quality (as well as those of quantity) in the sector are fairly close to one another, and, to achieve the optimal levels, the sector should increase quality and reduce quantity of the service by a small determinable margin.