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Intermediate input sharing in the hospital service industry

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  • Li, Jing

Abstract

This paper addresses two related questions that help to explain geographic variation in access to medical services. The first question examines the existence of agglomeration economies in the hospital service industry. The second considers whether the sharing of intermediate inputs contributes to spillovers from spatial concentration of hospital services. These questions are addressed by estimating a bivariate probit model that explicitly controls for potential correlations between whether a service is provided and how the service is provided. Three key findings are obtained. First, hospitals in more concentrated areas are more likely to outsource intermediate services to specialized intermediate service suppliers. This suggests that agglomeration economies exist in the hospital service industry and are generated in part through the sharing of intermediate inputs. Second, the presence of nearby small hospitals increases the tendency to outsource, which is consistent with a “Chinitz” effect identified elsewhere in the literature. Third, the agglomeration effect attenuates geographically.

Suggested Citation

  • Li, Jing, 2013. "Intermediate input sharing in the hospital service industry," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 888-902.
  • Handle: RePEc:eee:regeco:v:43:y:2013:i:6:p:888-902
    DOI: 10.1016/j.regsciurbeco.2013.09.004
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    References listed on IDEAS

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    Cited by:

    1. Li, Jing, 2014. "The influence of state policy and proximity to medical services on health outcomes," Journal of Urban Economics, Elsevier, vol. 80(C), pages 97-109.
    2. Stephen Sheppard & Michael Hellstern, 2014. "Fatal Attraction: health care agglomeration and its consequences," Department of Economics Working Papers 2014-05, Department of Economics, Williams College, revised Nov 2014.

    More about this item

    Keywords

    Agglomeration; Health care; Input sharing; Outsourcing;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • I00 - Health, Education, and Welfare - - General - - - General

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