Designing Hospital Antitrust Policy to Promote Social Welfare

Frontiers in Health Policy Research, Vol. 2 (Alan Garber, ed.), MIT Press

Posted: 14 Jan 2000

See all articles by Daniel P. Kessler

Daniel P. Kessler

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Mark B. McClellan

Brookings Institution; Council of Economic Advisors; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: January 1999

Abstract

Applying principles of merger evaluation to the health care industry in general, and to hospital markets in particular, poses several unique challenges. Definition of relevant geographic markets and assessment of the consequences of changes in competition for patient and social welfare are complicated by asymmetric information and moral hazard due to health insurance. We suggest a new empirical approach to assessing the impact of hospital competition which addresses the shortcomings of existing methods. We then summarize our main results on the welfare consequences of competition. We conclude with an illustration of how our methods can be used to assess the welfare implications of specific hospital mergers, and with some implications of our findings for antitrust policy.

Note: An earlier version of this article was announced as Stanford Law School, John M. Olin Program in Law and Economics Working Paper No. 172, January 1999. The working paper can be downloaded from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=147382

JEL Classification: I11, I12, L44

Suggested Citation

Kessler, Daniel Philip and McClellan, Mark B., Designing Hospital Antitrust Policy to Promote Social Welfare (January 1999). Frontiers in Health Policy Research, Vol. 2 (Alan Garber, ed.), MIT Press. Available at SSRN: https://ssrn.com/abstract=196548

Daniel Philip Kessler (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-4492 (Phone)
650-725-6152 (Fax)

National Bureau of Economic Research (NBER)

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Mark B. McClellan

Brookings Institution ( email )

1775 Massachusetts Ave., NW
Washington, DC 20036
United States

Council of Economic Advisors ( email )

Eisenhower Executive Office Building
17th and Pennsylvania Avenue, NW
Washington, DC 20502
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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