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Anti-cartel enforcement and subsequent mergers: state-level evidence for physician groups

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  • Robert M. Feinberg

    (American University)

Abstract

From the earliest days of antitrust, it has been clear that cartel pricing and monopoly pricing (given certain cost conditions) yield equivalent results. An implication of this is that government actions limiting either of cartels or mergers should provide incentive for more of the other. Despite the somewhat intuitive theoretical support for a relationship, there has been little empirical investigation into the role that antitrust enforcement of one type might have on firms in pursuing anti-competitive actions of the other. The emergence of significant state-level antitrust enforcement over the past several decades provides us with the opportunity to take advantage of the considerable variation in this enforcement and possibly identify resulting merger activity affecting small geographic markets. In this paper we use variation in state antitrust enforcement to proxy differing signals sent to health professionals and then study the impact on consolidation of physician groups at the state level. While trends in the consolidation by U.S. health practitioners over the past several decades have been driven by a variety of market and policy determinants, this paper provides suggestive evidence that one contributing factor may have been the introduction of the threat of state-level antitrust enforcement against horizontal agreements within local markets.

Suggested Citation

  • Robert M. Feinberg, 2016. "Anti-cartel enforcement and subsequent mergers: state-level evidence for physician groups," Economics Bulletin, AccessEcon, vol. 36(1), pages 365-372.
  • Handle: RePEc:ebl:ecbull:eb-15-00717
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    References listed on IDEAS

    as
    1. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2013. "Fight cartels or control mergers? On the optimal allocation of enforcement efforts within competition policy," International Review of Law and Economics, Elsevier, vol. 34(C), pages 34-40.
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    5. Abe Dunn & Adam Hale Shapiro, 2014. "Do Physicians Possess Market Power?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 159-193.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    state-level antitrust; physician consolidation; health professions; anti-cartel enforcement; Goldfarb case;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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