The price effects of cross‐market mergers: theory and evidence from the hospital industry
Author
Dafny, Leemore
Ho, Kate
Lee, Robin S.
Published Version
https://doi.org/10.1111/1756-2171.12270Metadata
Show full item recordCitation
Dafny, Leemore S., Katherine Ho, and Robin S. Lee. "The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry." RAND Journal of Economics 50, no. 2 (Summer 2019): 286–325.Abstract
We consider the effect of mergers between firms whose products are not viewed as direct substitutes for the same good or service but are bundled by a common intermediary. Focusing on hospital mergers across distinct geographic markets, we show that such combinations can reduce competition among merging hospitals for inclusion in insurers' networks, leading to higher prices (or lower-quality care). Using data on hospital mergers from 1996 to 2012, we find support that this mechanism operates within state boundaries: cross-market, within-state hospital mergers yield price increases of 7%–9% for acquiring hospitals, whereas out-of-state acquisitions do not yield significant increases.Other Sources
https://www.nber.org/papers/w22106Terms of Use
This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAPCitable link to this page
http://nrs.harvard.edu/urn-3:HUL.InstRepos:41844846
Collections
- FAS Scholarly Articles [18256]
- HBS Scholarly Articles [853]
Contact administrator regarding this item (to report mistakes or request changes)