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Countervailing Market Power and Consumer Surplus: An Empirical Examination

Author

Listed:
  • Jorge Alé-Chilet
  • Juan Pablo Atal

Abstract

A current debate in antitrusts analyzes whether to allow horizontal agreements that counteract large imbalances of power in vertical negotiations. We leverage detailed data to empirically assess the consequences for patients of a recent case in which a group of physicians in Chile formed a trade association to improve their bargaining position with insurers. As a result of this agreement, out-of-pocket costs increased by 160 percent. Overall, we find large decreases in consumer surplus.

Suggested Citation

  • Jorge Alé-Chilet & Juan Pablo Atal, 2020. "Countervailing Market Power and Consumer Surplus: An Empirical Examination," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 579-583, May.
    • Handle: RePEc:aea:apandp:v:110:y:2020:p:579-83
    DOI: 10.1257/pandp.20201012
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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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