Competition among Hospitals
Martin Gaynor and
William Vogt (william.b.vogt@gmail.com)
The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK
Abstract:
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.
Keywords: analysis; of; health; care; markets (search for similar items in EconPapers)
JEL-codes: I11 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2003-07
New Economics Papers: this item is included in nep-com, nep-hea, nep-ind, nep-mfd and nep-ure
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Journal Article: Competition among Hospitals (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:cmpowp:03/087
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