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Evolving Measures of Provider Market Power

Author

Listed:
  • David Dranove

    (Kellogg School of Management, Northwestern University)

  • Christopher Ody

    (Kellogg School of Management, Northwestern University)

Abstract

Many researchers assess the impact of provider market structure and market power on outcomes such as price. These studies use a variety of measures of structure and power, ranging from ad hoc measures often based on census boundaries to structural measures derived from economic models of provider-payer bargaining. We explain the shortcomings of ad hoc measures, and, through a series of "horse races" show that one leading structural measure, the "willingness to pay," is a consistently better predictor of prices.

Suggested Citation

  • David Dranove & Christopher Ody, 2016. "Evolving Measures of Provider Market Power," American Journal of Health Economics, University of Chicago Press, vol. 2(2), pages 145-160, Spring.
    • Handle: RePEc:ucp:amjhec:v:2:y:2016:i:2:p:145-160
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    References listed on IDEAS

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    1. Gautam Gowrisankaran & Aviv Nevo & Robert Town, 2015. "Mergers When Prices Are Negotiated: Evidence from the Hospital Industry," American Economic Review, American Economic Association, vol. 105(1), pages 172-203, January.
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    6. Zwanziger, Jack & Melnick, Glenn A. & Mann, Joyce M., 1990. "Measures of hospital market structure: a review of the alternatives and a proposed approach," Socio-Economic Planning Sciences, Elsevier, vol. 24(2), pages 81-95.
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    Cited by:

    1. Chiara Brouns & Rudy Douven & Ron Kemp, 2021. "Prices and market power in mental health care: Evidence from a major policy change in the Netherlands," Health Economics, John Wiley & Sons, Ltd., vol. 30(4), pages 803-819, April.
    2. Berden, Carolien & Croes, R. & Kemp, R. & Mikkers, Misja & van der Noll, Rob & Shestalova, V. & Svitak, Jan, 2019. "Hospital Competition in the Netherlands : An Empirical Investigation," Discussion Paper 2019-008, Tilburg University, Tilburg Law and Economic Center.
    3. Chiara Brouns & Rudy Douven & Ron Kemp, 2021. "Prices and market power in mental health care: Evidence from a major policy change in the Netherlands," Health Economics, John Wiley & Sons, Ltd., vol. 30(4), pages 803-819, April.
    4. Dunn, Abe & Knepper, Matthew & Dauda, Seidu, 2021. "Insurance expansions and hospital utilization: Relabeling and reabling?," Journal of Health Economics, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    competition; market structure; market share;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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