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Is Hospital Competition Wasteful?

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Author Info
David Dranove
Mark Shanley
Carol Simon
Abstract

Recent attention has been given to the hypothesis that local hospital competition takes the form of costly duplication of specialized services -- the "medical arms race." This contrasts with the hypothesis that the supply of specialized services is determined solely by "the extent of the market." We develop a model predicting the provision of specialized services in local markets. Our analysis of California hospitals provides minimal support for the medical arms race hypothesis while suggesting substantial scale economies for many services. Our results emphasize the importance of properly specifying the extent of the market. Failure to do so leads one to overestimate the importance of competition.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28199222%2923%3A2%3C247%3AIHCW%3E2.0.CO%3B2-Z&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 23 (1992)
Issue (Month): 2 (Summer)
Pages: 247-262
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Handle: RePEc:rje:randje:v:23:y:1992:i:summer:p:247-262

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  2. Martin Gaynor, 2006. "What Do We know About Competition and Quality in Health Care Markets?," The Centre for Market and Public Organisation 06/151, Department of Economics, University of Bristol, UK. [Downloadable!]
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  3. Joëlle Noailly & Richard Nahuis, 2005. "Competition and quality in the notary profession," CPB Documents 94, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  4. Eulália Dalmau-Atarrodona & Jaume Puig-Junoy, 1998. "Market Structure and Hospital Efficiency: Evaluating Potential Effects of Deregulation in a National Health Service," Review of Industrial Organization, Springer, vol. 13(4), pages 447-466, August. [Downloadable!] (restricted)
  5. Fabbri, D & Robone, S, 2008. "The geography of hospital admission in a National Health Service with patient choice: evidence from Italy," Health, Econometrics and Data Group (HEDG) Working Papers 08/29, HEDG, c/o Department of Economics, University of York. [Downloadable!]
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  6. Rosella Levaggi, 2005. "Hospital Health Care: Pricing and Quality Control in a Spatial Model with Asymmetry of Information," International Journal of Health Care Finance and Economics, Springer, vol. 5(4), pages 327-349, December. [Downloadable!] (restricted)
  7. Michael Chernew & Gautam Gowrisankaran & A. Mark Fendrick, 2001. "Payer Type and the Returns to Bypass Surgery: Evidence from Hospital Entry Behavior," NBER Working Papers 8632, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Daniel P. Kessler & Mark B. McClellan, 1999. "Is Hospital Competition Socially Wasteful?," NBER Working Papers 7266, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Eulàlia Dalmau & Jaume Puig, 1997. "Market Structure and Hospital Efficiency: Evaluating Potential Effects of Deregulation in a National Health Service," Economics Working Papers 214, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  11. Martin Gaynor & William B. Vogt, 1999. "Antitrust and Competition in Health Care Markets," NBER Working Papers 7112, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Martin Gaynor & Deborah Haas-Wilson, 1998. "Change, Consolidation, and Competition in Health Care Markets," NBER Working Papers 6701, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. M. Martin Boyer & Pierre Thomas Léger, 2001. "Inflation as a Strategic Response," CIRANO Working Papers 2001s-26, CIRANO. [Downloadable!]
  14. Steven Berry & Joel Waldfogel, 1996. "Free Entry and Social Inefficiency in Radio Broadcasting," NBER Working Papers 5528, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Eulàlia Dalmau & Jaume Puig, 1997. "Market Structure and Hospital Efficiency: Evaluating Potential Effects of Deregulation in a National Health Service," Working Papers, Research Center on Health and Economics 214, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  18. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2009. "Hospital Competition and Quality with Regulated Prices," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  19. Dana Goldman & John A. Romley, 2008. "Hospitals As Hotels: The Role of Patient Amenities in Hospital Demand," NBER Working Papers 14619, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Alfons Palangkaraya & Jongsay Yong, 2009. "Hospital Markets and the Effect of Competition on Quality," Melbourne Institute Working Paper Series wp2009n17, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  23. William D. White Michael A. Morrisey, 1998. "Are Patients Traveling Further?," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(2), pages 203-221, July. [Downloadable!] (restricted)
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