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The Northridge Earthquake: A Natural Experiment in Market Structure

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  • Sean Ennis.

Abstract

This paper focuses on structural damage from the Northridge earthquake of 1994 as an exogenous shock to hospital capacity in the Los Angeles area. The exogenous shock allows us to identify the effect of reduced capacity on prices by avoiding the standard problem that market variables, such as prices and capacity, are typically determined endogenously. Hospitals in areas unaffected by the earthquake serve as a control group to establish expected prices in the absence of capacity changes. The findings are consistent with a significant positive price effect from the reduced capacity.

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  • Sean Ennis., 1995. "The Northridge Earthquake: A Natural Experiment in Market Structure," Economics Working Papers 95-244, University of California at Berkeley.
    • Handle: RePEc:ucb:calbwp:95-244
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    Cited by:

    1. Kenneth I. Wolpin & Mark R. Rosenzweig, 2000. "Natural "Natural Experiments" in Economics," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 827-874, December.

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