The hospital competition literature shows that estimates of the effect of local market structure (concentration) on pricing (competition) are sensitive to geographic market definition. Our spatial lag model approach effects smoothing of the explanatory variables across the discrete market...

In spatial econometrics, the typical alternative of spatial autocorrelation is expressed in the form of a spatial autorregressive process. While the bulk of the literature is devoted to specification tests and estimation methods for these models, alternatives have been suggested as well. In this...