Is Hospital Competition Wasteful?

David Dranove, Mark Shanley and Carol Simon

RAND Journal of Economics, 1992, vol. 23, issue 2, 247-262

Abstract: Recent attention has been given to the hypothesis that local hospital competition takes the form of costly duplication of specialized services -- the "medical arms race." This contrasts with the hypothesis that the supply of specialized services is determined solely by "the extent of the market." We develop a model predicting the provision of specialized services in local markets. Our analysis of California hospitals provides minimal support for the medical arms race hypothesis while suggesting substantial scale economies for many services. Our results emphasize the importance of properly specifying the extent of the market. Failure to do so leads one to overestimate the importance of competition.

Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (79)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819922 ... O%3B2-Z&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
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:rje:randje:v:23:y:1992:i:summer:p:247-262

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().