Mergers and Exclusionary Practices in Health Care Markets
We evaluate the relationship between insurers (payers) and providers of health care (hospitals) when they each have a nonnegligible share of the market. We focus in particular on their incentives to merge and the existence of equilibria where payers offer preferential treatment to a subset of hospitals. We demonstrate that hospitals are more likely to merge without consolidating their capacities the less competitive they are vis-à-vis the payer's market. Payers are more likely to merge without consolidating their capacities the less competitive either the hospitals' or the payers' market is. A given payer follows an exclusionary strategy when its starting bargaining position vis-à-vis hospitals is weak. At such exclusionary equilibria, payers tend to distinguish themselves from neighboring payers by contracting with a different subset of hospitals. Copyright (c) 1999 Massachusetts Institute of Technology.
Year of publication: |
1999
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Authors: | Gal-Or, Esther |
Published in: |
Journal of Economics & Management Strategy. - Wiley Blackwell. - Vol. 8.1999, 3, p. 315-350
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Publisher: |
Wiley Blackwell |
Saved in:
freely available
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