Replication data for: Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Principal Investigator(s): View help for Principal Investigator(s) Gautam Gowrisankaran; Aviv Nevo; Robert Town

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Project Citation:

Gowrisankaran, Gautam, Nevo, Aviv, and Town, Robert. Replication data for: Mergers When Prices Are Negotiated: Evidence from the Hospital Industry. Nashville, TN: American Economic Association [publisher], 2015. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E112908V1

Project Description

Summary: We estimate a bargaining model of competition between hospitals and managed care organizations (MCOs) and use the estimates to evaluate the effects of hospital mergers. We find that MCO bargaining restrains hospital prices significantly. The model demonstrates the potential impact of coinsurance rates, which allow MCOs to partly steer patients toward cheaper hospitals. We show that increasing patient coinsurance tenfold would reduce prices by 16 percent. We find that a proposed hospital acquisition in Northern Virginia that was challenged by the Federal Trade Commission would have significantly raised hospital prices. Remedies based on separate bargaining do not alleviate the price increases. (JEL C78, G34, I11, I13, L13)

Scope of Project

JEL Classification:
      C78 Bargaining Theory; Matching Theory
      G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
      I11 Analysis of Health Care Markets
      I13 Health Insurance, Public and Private
      L13 Oligopoly and Other Imperfect Markets

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Published Versions

V1 [2019-10-12]

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