03061oam 22004453a 450 991069830680332120230622022748.0(NBER)w9471(CKB)3240000000018645(OCoLC)231687800(EXLCZ)99324000000001864520230622d2003 fy 0engurcnu||||||||txtrdacontentcrdamediacrrdacarrierCompetition Among Hospitals /Martin Gaynor, William B. VogtCambridge, MassNational Bureau of Economic Research2003[Washington, D.C.] :[Bureau of Economics, U.S. Federal Trade Commission],[2003]1 online resourceillustrations (black and white);NBER working paper seriesno. w9471February 2003.Our objective is to determine the effect of ownership type (for-profit, not-for-profit, government) on firm conduct in hospital markets. Secondary objectives include estimating hospital demand systems useful for market definition and merger simulation. To this end, we estimate a structural model of demand and pricing in the short term hospital industry in California, and then use the estimates to simulate the effect of a merger. Demand is modeled at the level of individual consumers using discrete choice techniques and micro data on individuals. Price in the demand equation is endogenous, and we use recently developed instrumental variables techniques to correct for this. We allow the behavior of for-profit and not-for-profit firms to differ, modeling these differences structurally following the relevant theory literature. We find that California hospitals in 1995 faced a downward-sloping demand for their products, with an average price elasticity of demand of -5.67. Not-for-profit hospitals face less elastic demand and have lower marginal costs. Their prices are lower, but markups are higher than those of for-profits. We simulate the effects of the 1997 merger of two hospital chains. In unconcentrated markets such as Los Angeles and San Diego, the merger has virtually no effect on prices. However, in San Luis Obispo County, where the merger creates a near monopoly, prices rise by up to 58%, and the predicted price increase would not be substantially smaller were the chains to be not-for-profit.Working Paper Series (National Bureau of Economic Research)no. w9471.Market Structure, Firm Strategy, and Market PerformancejelcAntitrust Issues and PoliciesjelcMarket Structure, Firm Strategy, and Market PerformanceAntitrust Issues and PoliciesL1jelcL4jelcGaynor Martin125959Vogt William B236684National Bureau of Economic Research.MaCbNBERMaCbNBERBOOK9910698306803321Competition Among Hospitals3389956UNINA