Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery

David M. Cutler, Robert Huckman and Jonathan T. Kolstad

American Economic Journal: Economic Policy, 2010, vol. 2, issue 1, 51-76

Abstract: Prior studies suggest that with elastically supplied inputs free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON ) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher quality surgeons, and that this entry was approximately welfare neutral. (JEL I11, L13)

JEL-codes: I11 L13 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/pol.2.1.51
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.51 (application/pdf)
http://www.aeaweb.org/aej/pol/data/2008-0032_data.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery (2009)
Working Paper: Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:2:y:2010:i:1:p:51-76

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().