Prices and Quantities in Health Care Antitrust Damages

Martha Starr () and R McCluer

No 2014-03, Working Papers from American University, Department of Economics

Abstract: Antitrust analysis conventionally assumes that illegal agreements among competitors raise prices and lower quantities, relative to lawful competition. However, markets for healthcare services have tendencies towards overprovision, which may increase when competition declines. This paper examines this possibility using data from a well-known antitrust case in Wisconsin. We find that, in parts of the state where physician groups illegally divided up markets, costs of physician services rose by about 10% more than they did elsewhere, with about half of this increase due to increased services. This suggests that higher quantities can contribute to healthcare antitrust damages, along with higher prices.

Date: 2014
New Economics Papers: this item is included in nep-com, nep-hea, nep-ind and nep-sog
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https://doi.org/10.17606/72b5-7w05 First version, 2014 (application/pdf)

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