Spatial Interaction, Spatial Multipliers, and Hospital Competition
AbstractThe hospital competition literature demonstrates that estimates of the effect of local market structure on competition are sensitive to geographic market definition. Our spatial lag approach effects smoothing of the explanatory variables across the discrete market boundaries. This approach results in robust estimates of the impact of market structure on hospital pricing, which can be used to estimate the full effect of changes in prices inclusive of spillovers that cascade through the neighboring hospital markets. In markets where concentration is relatively high before a proposed merger, we demonstrate that OLS estimates can lead to the wrong antitrust policy conclusion while the more conservative lag estimates do not.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt4m8862hd.
Date of creation: 01 Jun 2008
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spatial econometrics; spatial lag model; spatial multiplier; spatial spillovers; hospital antitrust; hospital competition; strategic pricing; Nash bargaining;
Other versions of this item:
- Lee Mobley & H. E. Frech & Luc Anselin, 2009. "Spatial Interaction, Spatial Multipliers and Hospital Competition," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 16(1), pages 1-17.
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