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Multimarket Contact in the Hospital Industry

  • Matt Schmitt
American Economic Journal: Economic Policy
vol. 10, no. 3, August 2018
(pp. 361-87)
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Abstract

Hospitals in the United States increasingly belong to multihospital systems that operate in numerous geographic markets. A large literature in management and economics suggests that competition between firms may be softened as a result of multimarket contact—ie., firms competing with one another in multiple markets simultaneously. Exploiting plausibly exogenous variation in multimarket contact generated by out-of-market consolidation, I find that increases in multimarket contact over the 2000–2010 period led to higher hospital prices. These results suggest that continued hospital consolidation may produce higher prices even if that consolidation only minimally affects within-market concentration.

Citation

Schmitt, Matt. 2018. "Multimarket Contact in the Hospital Industry." American Economic Journal: Economic Policy, 10 (3): 361-87. DOI: 10.1257/pol.20170001

Additional Materials

JEL Classification

  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • G38 Corporate Finance and Governance: Government Policy and Regulation
  • I11 Analysis of Health Care Markets
  • I18 Health: Government Policy; Regulation; Public Health
  • K21 Antitrust Law
  • L41 Monopolization; Horizontal Anticompetitive Practices
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