ENTRY AND COMPETITION IN LOCAL HOSPITAL MARKETS -super-*
AbstractWe 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. The Bresnahan and Reiss model infers changes in the toughness of competition from entry threshold ratios. Entry threshold ratios, however, identify the product of changes in the toughness of competition and changes in fixed costs. By using quantity data, we are able to identify separately changes in the toughness of competition from changes in fixed costs. This model is generally applicable to industries where there are good data on market structure and quantity, but not on prices, as for example in the quinquennial U.S. Economic Census. 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. Copyright 2007 Blackwell Publishing Ltd..
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 55 (2007)
Issue (Month): 2 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Martin Gächter & Peter Schwazer & Engelbert Theurl, 2011.
"Entry and Exit of Physicians in a two-tiered public/private Health Care System,"
2011-05, Faculty of Economics and Statistics, University of Innsbruck.
- Martin Gächter & Peter Schwazer & Engelbert Theurl, 2011. "Entry and Exit of Physicians in a two-tiered public/private Health Care System," NRN working papers 2011-01, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- Martin Gaynor & Robert J Town, 2012.
"Competition in Health Care Markets,"
The Centre for Market and Public Organisation
12/282, Department of Economics, University of Bristol, UK.
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