Competition among Hospitals
We examine competition in the hospital industry, in particular the effect of ownership type (for-profit, no-for-profit, government). We estimate a structural model of demand and pricing in the hospital industry in California, then use the estimates to simulate the effect of a merger. California hospitals in 1995 face an average price elasticity of demand of -4.85. Not-for-profit hospitals face less elastic demand and act as if they have lower marginal costs. Their prices are lower than for-profits, but markups are higher. We simulate the effects of the 1997 merger of two hospital chains. In San Luis Obispo County, where the merger creates a near monopoly, prices rise by up to 53%, and the predicted price increase would not be substantially smaller were the chains not-for-profits.
|Date of creation:||Jul 2003|
|Date of revision:|
|Contact details of provider:|| Postal: 2 Priory Road, Bristol, BS8 1TX|
Phone: 0117 33 10799
Fax: 0117 33 10705
Web page: http://www.bris.ac.uk/cmpo/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Werden, G.J. & Froeb, L.M. & Tardiff, T.J., 1994.
"The Use of the Logit Model in Applied Industrial Organization,"
94-1, U.S. Department of Justice - Antitrust Division.
- Gregory Werden & Luke Froeb & Timothy Tardiff, 1996. "The Use of the Logit Model in Applied Industrial Organization," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 3(1), pages 83-105.
- Vita, Michael G & Sacher, Seth, 2001. "The Competitive Effects of Not-for-Profit Hospital Mergers: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 63-84, March.
- Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May.
When requesting a correction, please mention this item's handle: RePEc:bri:cmpowp:03/087. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.