Complementarity or substitutability in networks? Methodology and application to the hospital industry

Philippe Choné and Lionel Wilner

No 2015-07, Working Papers from Center for Research in Economics and Statistics

Abstract: We develop a network approach to study the transmission and propagation of firm-level shocks in industries with spatially differentiated agents and imperfect competition. Deriving comparative statics for oligopoly from the properties of Leontief matrices, we construct centrality indicators that reflect the geographic distribution of firms as well as their importance in the network. When longitudinal data are available, we show how to estimate the link between the firms' responses to the shocks and the centrality indicators, and to empirically assess the nature and strength of strategic interactions. The results in our application strongly suggest that the utilitiesprovided by hospitals to patients are strategic complements.

Keywords: Network interactions; propagation of shocks; centrality indicators; imperfect competition; hospital choice. (search for similar items in EconPapers)
JEL-codes: D4 D85 I1 L1 (search for similar items in EconPapers)
Pages: 54
Date: 2015-08
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Related works:
Journal Article: Financial Incentives and Competitive Pressure: The Case of the Hospital Industry (2022)
Working Paper: Financial Incentives and Competitive Pressure: The Case of the Hospital Industry (2020)
Working Paper: Competition on Unobserved Attributes: The Case of the Hospital Industry (2019)
Working Paper: Competition on Unobserved Attributes: The Case of the Hospital Industry (2019)
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