Entry and Competition in Local Hospital Markets
57 Pages Posted: 4 Dec 2005 Last revised: 31 Oct 2022
There are 2 versions of this paper
Entry and Competition in Local Hospital Markets
Date Written: October 2005
Abstract
There has been considerable consolidation in the hospital industry in recent years. Over 900 deals occurred from 1994-2000, and many local markets, even in large urban areas, have been reduced to monopolies, duopolies, or triopolies. This surge in consolidation has led to concern about competition in local markets for hospital services. We examine the effect of market structure on competition in local hospital markets -- specifically, does the hardness of competition increase with the number of firms? We extend the entry model developed by Bresnahan and Reiss to make use of quantity information, and apply it to data on the U.S. hospital industry. In the hospital markets we examine, entry leads to a quick convergence to competitive conduct. Entry reduces variable profits and increases quantity. Most of the effects of entry come from having a second and a third firm enter the market. The fourth entrant has little estimated effect. The use of quantity information allows us to infer that entry is consumer-surplus-increasing.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Competition in Health Care Markets
By Martin Gaynor and Robert J. Town
-
Antitrust and Competition in Health Care Markets
By Martin Gaynor and William B. Vogt
-
Antitrust and Competition in Health Care Markets
By Martin Gaynor and William B. Vogt
-
Change, Consolidation, and Competition in Health Care Markets
By Martin Gaynor and Deborah Haas-wilson
-
Change, Consolidation, and Competition in Health Care Markets
By Martin Gaynor and Deborah Haas-wilson
-
Are Invisible Hands Good Hands? Moral Hazard, Competition, and the 2nd Best in Health Care Markets
By Martin Gaynor, Deborah Haas-wilson, ...
-
By Martin Gaynor, Deborah Haas-wilson, ...
-
By Martin Gaynor and William B. Vogt
-
By Martin Gaynor and William B. Vogt