Multimarket Contact in the Hospital Industry

Matt Schmitt

American Economic Journal: Economic Policy, 2018, vol. 10, issue 3, 361-87

Abstract: Hospitals in the United States increasingly belong to multihospital systems that operate in numerous geographic markets. A large literature in management and economics suggests that competition between firms may be softened as a result of multimarket contact—ie., firms competing with one another in multiple markets simultaneously. Exploiting plausibly exogenous variation in multimarket contact generated by out-of-market consolidation, I find that increases in multimarket contact over the 2000–2010 period led to higher hospital prices. These results suggest that continued hospital consolidation may produce higher prices even if that consolidation only minimally affects within-market concentration.

JEL-codes: G34 G38 I11 I18 K21 L41 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/pol.20170001
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Citations: View citations in EconPapers (18)

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