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Prices and Quantities in Health Care Antitrust Damages

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  • Martha A. Starr
  • R. Forrest McCluer

Abstract

Antitrust analysis conventionally assumes that illegal agreements among competitors raise prices and lower quantities, relative to lawful competition. However, markets for healthcare services have tendencies towards overprovision, which may increase when competition declines. This paper examines this possibility using data from a well-known antitrust case in Wisconsin. We find that, in parts of the state where physician groups illegally divided up markets, costs of physician services rose by about 10% more than they did elsewhere, with about half of this increase due to increased services. This suggests that higher quantities can contribute to healthcare antitrust damages, along with higher prices.

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File URL: http://www.american.edu/cas/economics/research/upload/2014-03.pdf
File Function: First version, 2014
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Paper provided by American University, Department of Economics in its series Working Papers with number 2014-03.

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Date of creation: 2014
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Handle: RePEc:amu:wpaper:2014-03
Contact details of provider: Web page: http://www.american.edu/cas/economics/

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  11. Martha A. Starr & R. Forrest McCluer, 2012. "Using Difference-in-Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic," Working Papers 2012-07, American University, Department of Economics.
  12. Marie Allard & Pierre Thomas Léger & Lise Rochaix, 2009. "Provider Competition in a Dynamic Setting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(2), pages 457-486, 06.
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Cited by:

  1. Martha A. Starr & R. Forrest McCluer, 2012. "Using Difference-in-Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic," Working Papers 2012-07, American University, Department of Economics.

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