Estimating the Impact of a Hospital Merger Using the Difference-in-Differences of Prices

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Abstract

This paper comments on "The Price Effects of Hospital Mergers: A Case Study of Sutter-Summit Transaction" by Steven Tenn. I exposit a simple model of differentiated products competition and consider the implications of Tenn's findings in the context of this model. I find that Tenn provides compelling evidence that the merger led to a price increase at Summit Hospital. The causes of the price increase and the welfare implications of the merger are less clear, particularly since anecdotal evidence suggests that quality increased at Summit Hospital post-merger. A difference-in-differences analysis using quality and quantity data can shed more light on the consequences of the merger.

Original languageEnglish (US)
Pages (from-to)83-89
Number of pages7
JournalInternational Journal of the Economics of Business
Volume18
Issue number1
DOIs
StatePublished - Feb 1 2011

Keywords

  • Bertrand equilibrium
  • Discrete choice models
  • Hospital mergers
  • Hospital quality

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Economics and Econometrics

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