Private Equity, Consumers, and Competition

83 Pages Posted: 19 Jun 2020 Last revised: 17 May 2023

See all articles by Ashvin Gandhi

Ashvin Gandhi

University of California, Los Angeles (UCLA) - Anderson School of Management

YoungJun Song

San Diego State University

Prabhava Upadrashta

Duke University - Fuqua School of Business

Date Written: May 16, 2023

Abstract

This paper studies how product market competition shapes the impact of PE acquisitions on consumers. We examine nursing home buyouts and find PE-owned facilities exhibit greater competitive sensitivity, competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak. We find PE-owned facilities are more sensitive to local market competition and are more responsive to a pro-competitive policy helping consumers compare nursing homes. This indicates that regulators should regard the competitive sensitivity of acquirers in addition to the concentration of markets where acquisitions occur, and consider pro-competitive policies to mitigate or even reverse PE's potentially adverse consequences.

Keywords: Private equity, Buyouts, Competition, Health care, Nursing homes, Product quality, Disclosure, Ratings

JEL Classification: G34, I11, I18, L11, L13, L15

Suggested Citation

Gandhi, Ashvin and Song, YoungJun and Upadrashta, Prabhava, Private Equity, Consumers, and Competition (May 16, 2023). Available at SSRN: https://ssrn.com/abstract=3626558 or http://dx.doi.org/10.2139/ssrn.3626558

Ashvin Gandhi (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.ashvingandhi.com

YoungJun Song

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Prabhava Upadrashta

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

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