Simulating Hospital Merger Simulations
101 Pages Posted: 16 Apr 2018 Last revised: 23 Sep 2018
Date Written: March 20, 2018
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
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