The Architecture for Health Care Markets: Economic Sociology and Antitrust Law

Abstract

Why an economic sociology of health care markets? Surprisingly, while neoclassical economics has well-developed models of competition, it has a fairly impoverished understanding of markets. If economists treat the firm as a black box, the same is equally true of the market. Without a better theory of health care markets and how public and private elements interact, judges will be constrained in their ability to formulate workable antitrust policy, and legislators will be constrained in their ability to formulate a more rational competition policy. Much of my past work has sought answers to these questions looking, as an economist and antitrust lawyer, from the inside out. This essay is an effort to examine health care markets from the outside in, through the lens of economic sociology, rather than traditional economic theory. The principal aid in this process will be Neil Fligstein's book, "The Architecture of Markets: An Economic Sociology of Twenty-First-Century Capitalist Societies". The analysis proceeds as follows: Drawing upon Fligstein's insights, Part II highlights four general fallacies of neoclassical economic understandings of markets (fallacies, at least, from a sociological perspective). Part III uses the tools of economic sociology to construct an architecture of health care markets. Part IV considers the implications of the foregoing on three issues that are significant to the future of medical antitrust law: What are the implications for efforts to construct a competition policy in health care? What are the implications for efforts to better cultivate dynamic efficiency? Finally, what are the implications of economic sociology for the antitrust state action immunity doctrine, the principal tool courts use to police the boundary between the public and private sides of economic markets?