lecture 10 - retrospective analysis and merger simulation in healthcare

Question 1

2 approaches to study the impact of the merger

Answer 1

1. Structure-conduct performance
2. Event study approach

Question 2

1. Structure-conduct performance

Answer 2

2 advantages:
* Relatively easy
* Sometimes only way

3 disadvantages
* No actual changes or events
* Match with theory
* Bias

Question 3

using WTP for antitrust purposes

Answer 3

Patients enrolled in A may only have a small WTP for adding hospital k to the network because the included hospital j is an excellent substitute.

now suppose j and k merge and inform MCO A that it must include both j and k in its network if it wants either one. If A excludes both j and k, then tis enrolees’ WTP for the bundle j and k is likely to be large because there is no nearby substitute. In this case, j’s and k’s joint WTP may greatly exceed the sum of their isolated WTPs.”