TY - JOUR
T1 - The price effects of cross-market mergers
T2 - theory and evidence from the hospital industry
AU - Dafny, Leemore
AU - Ho, Kate
AU - Lee, Robin S.
N1 - Publisher Copyright:
© 2019, The RAND Corporation.
PY - 2019/6/1
Y1 - 2019/6/1
N2 - 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 1996–2012, 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.
AB - 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 1996–2012, 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.
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U2 - 10.1111/1756-2171.12270
DO - 10.1111/1756-2171.12270
M3 - Article
AN - SCOPUS:85064177717
SN - 0741-6261
VL - 50
SP - 286
EP - 325
JO - RAND Journal of Economics
JF - RAND Journal of Economics
IS - 2
ER -