| This dissertation is composed of three essays that make theoretical and empirical contributions to research topics in industrial organization and health economics.;In chapter 2, I propose a method of hospital merger analysis which relies, in part, on the index of hospital competition developed in chapter 1. I use this method to estimate the economic implications of the wave of hospital mergers that occurred in the 1990s. In addition, I evaluate the efficacy of this methodology by comparing simulated and actual price changes due to mergers. I find that the wave of mergers triggered a substantial increase in price for merging and non-merging hospitals with the biggest price increases accruing to hospitals that merge with other hospitals in their immediate competitive environment. In evaluating my methodology, I find that the average correlation between simulated and actual prices is about 0.74.;In chapter 3, I evaluate the effect of a regulation that banned a requirement that emergency physicians seek permission from health insurers before treating patients. Using a difference-in-difference methodology that compares patients subject to this requirement and those that are not, I find that the regulation saved lives. Specifically, I find that thirty-day and in-hospital mortality decreased by 24 percent and 29 percent, respectively. This represents about 40 lives saved in the four years following the passage of the law. The regulation also eliminated treatment delay and insurer interference associated with seeking permission before treating a patient.;This dissertation makes four important contributions. First, it provides a simple, tractable, and theoretically-grounded framework for studying competition in differentiated products oligopoly markets. Second, it presents antitrust authorities with a methodology that does not rely on geographic market definition but predicts fairly well price increases due to mergers. Third, it shows that wave of mergers that occurred in the 1990s was a strategic attempt by hospitals to acquire market power and hence increase prices. Finally, it illustrates an instance where government oversight and regulation corrected an inefficiency in the hospital and health insurance market.;In chapter 1, I develop a theoretically-grounded competition index for differentiated products oligopoly and use it to assess: (1) the impact of concentration on price in hospital markets, (2) the price markup charged by hospitals, and (3) the implied price elasticity of hospital demand. Consistent with the literature on hospital competition, I find that hospital prices decrease significantly as markets become more competitive. Government hospitals face less elastic demand compared to hospitals with for-profit and not-for-profit owners. For-profit hospitals set higher prices than government and not-for-profit hospitals. However, government and not-for-profit hospitals have higher price markups. |
