Inter-brand Competition in the Convenience Store Industry, Store Accessibility and Healthcare Utilization

Abstract

We investigate the impact of access to convenience stores and competition between convenience store chains on medical care use and expenditures in Taiwan; the country with the highest density of convenience stores in the world. Our study makes use of insurance claims from 0.85 million individuals enrolled in Taiwan’s national health insurance program from 2002-2012 and administrative data on convenience store chain sales. While we find that both greater store accessibility and higher levels of inter-brand competition reduce the use and cost of outpatient medical services and prescription drugs, healthcare utilization is more responsive to changes in competition. Since convenience stores in Taiwan are typically the healthier option for ready-to-eat food, we postulate that the decline in medical care utilization is driven by a reduction in convenience store prices and increase in service quality relative to other food outlets. This is supported by findings from survey data indicating that convenience store competition is associated with greater consumption of more healthy foods, lower consumption of less healthy foods, and decreases in obesity rates. While the effects we find are precisely estimated, they are small in magnitude, with the increase in convenience store competition experienced by Taiwan over a 10-year period reducing medical expenditures on outpatient services and on prescription drugs by around one half of one percent.