Designing Hospital Antitrust Policy to Promote Social Welfare

30 Pages Posted: 14 Jul 2000 Last revised: 17 Apr 2008

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.

Suggested Citation

Kessler, Daniel Philip and McClellan, Mark B., Designing Hospital Antitrust Policy to Promote Social Welfare (January 1999). NBER Working Paper No. w6897. Available at SSRN: https://ssrn.com/abstract=227629

Daniel Philip Kessler (Contact Author)

Stanford Graduate School of Business ( email )

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National Bureau of Economic Research (NBER)

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Mark B. McClellan

Brookings Institution ( email )

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Council of Economic Advisors ( email )

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National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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