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Entry and Competition of Healthcare Providers in Slovakia: A Spatial Analysis

Author

Listed:
  • Martin Lábaj

    (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy)

  • Peter Mandžak

    (Value for Money Division, Ministry of Finance of the Slovak Republic)

Abstract

We study the relationship between market size and the number of firms in several healthcare professions in Slovakia to provide new evidence about their entry decisions and the toughness of competition on the market. The local market size that would support the entry of the first general practitioner was estimated at 1,400 inhabitants. This threshold equaled 1,700 inhabitants for the first pharmacy to enter and 2,300 for pediatricians. The population would have to more than double for the second professional to enter. To support the second firm, the population per firm in the market would have to increase by 30% for pharmacies, 25% for general practitioners, and almost 40% for pediatricians. However, after the entry of the second firm, the intensity of competition did not change, except for pediatricians. The results were robust to spatial interactions. Our estimates of spatial interactions showed negative (but decreasing) spatial spillover effects for pharmacies, general practitioners, and dentists between 1995 and 2010. In this period, competitive effects prevailed and outweighed demand spillovers. We document that the demand effect continued to grow after 2010 and in 2017 outweighed the competition effect for pharmacies. We show that an increase in the total number of pharmacies since 2010 led to diffusion into smaller markets and that the number of markets without a pharmacy decreased.

Suggested Citation

  • Martin Lábaj & Peter Mandžak, 2022. "Entry and Competition of Healthcare Providers in Slovakia: A Spatial Analysis," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(3), pages 211-236, March.
    • Handle: RePEc:sav:journl:v:70:y:2022:i:3:p:211-236
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    References listed on IDEAS

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    More about this item

    Keywords

    entry models; healthcare market; industrial organization;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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