Simulating Hospital Merger Simulations

89 Pages Posted: 16 Apr 2018  

David J. Balan

U.S. Federal Trade Commission

Keith Brand

Government of the United States of America - Federal Trade Commission

Date Written: March 20, 2018

Abstract

We assess the performance of three hospital merger simulation methods by means of a Monte Carlo experiment. We first specify a rich theoretical model of hospital markets and use it to generate “true” price effects of a large number of hospital mergers. We then use the theoretical model to generate the data that would be available in a real-world prospective merger analysis and apply the merger simulation methods to those data. Finally, we compare the predictions of the merger simulation methods to the true price effects. While there is some heterogeneity in performance, all three simulation methods perform reasonably well.

Keywords: Hospitals, Mergers, Hospital Mergers, Nash Bargaining, Merger Simulation, Oligopoly

JEL Classification: L11, L13, L31, L38, I11, I18

Suggested Citation

Balan, David J. and Brand, Keith, Simulating Hospital Merger Simulations (March 20, 2018). Available at SSRN: https://ssrn.com/abstract=3153109 or http://dx.doi.org/10.2139/ssrn.3153109

David J. Balan (Contact Author)

U.S. Federal Trade Commission ( email )

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

Keith Brand

Government of the United States of America - Federal Trade Commission ( email )

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

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