Competition and Crowding Out in the Market for Outpatient Substance Abuse Treatment

26 Pages Posted: 24 Jan 2013

See all articles by Andrew Milman Cohen

Andrew Milman Cohen

Board of Governors of the Federal Reserve - Division of International Finance (IFDP)

Beth A. Freeborn

Bureau of Economics

Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: February 2013

Abstract

U.S. markets for outpatient substance abuse treatment (OSAT) include for‐profit, nonprofit, and public clinics. We study OSAT provision using new methods on equilibrium market structure in differentiated product markets. This allows us to describe clinics as heterogeneous in their objectives, their responses to exogenous market characteristics, and their responses to one another. Consistent with crowding out of private treatment, we find that markets with public clinics are less likely to have private clinics. In markets with low insurance coverage, low incomes, or high shares of nonwhite addicts, however, public clinics are relatively likely to be the sole willing providers of OSAT.

Suggested Citation

Cohen, Andrew Milman and Freeborn, Beth A. and McManus, Brian, Competition and Crowding Out in the Market for Outpatient Substance Abuse Treatment (February 2013). International Economic Review, Vol. 54, Issue 1, pp. 159-184, 2013. Available at SSRN: https://ssrn.com/abstract=2206133 or http://dx.doi.org/10.1111/j.1468-2354.2012.00729.x

Andrew Milman Cohen (Contact Author)

Board of Governors of the Federal Reserve - Division of International Finance (IFDP) ( email )

20th St. and Constitution Ave.
Washington, DC 20551
United States

Beth A. Freeborn

Bureau of Economics ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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