Games Hospitals Play: Entry Deterrence in Hospital Procedure Markets

Strategic investment models, though popular in the theoretical literature, have rarely been tested empirically. This paper develops a model of strategic investment in inpatient procedure markets, which are well‐suited to empirical tests of this behavior. Potential entrants are easy to identify in su...

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Vydané v:Journal of economics & management strategy Ročník 14; číslo 3; s. 513 - 542
Hlavný autor: Dafny, Leemore S.
Médium: Journal Article
Jazyk:English
Vydavateľské údaje: 350 Main Street , Malden , MA 02148 , USA , and PO Box 1354, 9600 Garsington Road , Oxford OX4 2XG , UK Blackwell Publishing, Inc 01.09.2005
Wiley Subscription Services, Inc
Predmet:
Business strategies
Business studies
Cardiac surgery
Data quality
Decision making
Deterrence
Economic analysis
Empirical tests
Game theory
Games of strategy
Health care
Health economics
Hospital management
Hospitals
Inpatient care
Investment policy
Investments
Markets
Medical care
Medical decision making
Strategic management
Strategic planning
Studies
Tests
U.S.A
ISSN:1058-6407, 1530-9134
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Shrnutí:Strategic investment models, though popular in the theoretical literature, have rarely been tested empirically. This paper develops a model of strategic investment in inpatient procedure markets, which are well‐suited to empirical tests of this behavior. Potential entrants are easy to identify in such markets, enabling the researcher to accurately estimate the entry threat faced by different incumbents. I derive straightforward empirical tests of entry deterrence from a model of patient demand, procedure quality, and differentiated product competition. Using hospital data on electrophysiological studies, an invasive cardiac procedure, I find evidence of entry‐deterring investment. These findings suggest that competitive motivations play a role in treatment decisions.
Bibliografia:ArticleID:JEMS072
istex:F793AD3CAFB8095031CFB2BBEAD73D769EE3E9B2
ark:/67375/WNG-V5T17CWT-K
I thank Glenn Ellison, Jonathan Gruber, James Poterba, and David Cutler for exceptional guidance. I am grateful to David Dranove, Gautam Gowrisankaran, Bart Hamilton, Joseph Harrington, Vivian Ho, Julian Jamison, Michael Mazzeo, Wallace Mullin, Scott Stern, the editor Dan Spulber, the co‐editor, and an anonymous referee for helpful comments. Support from the National Science Foundation, the National Bureau of Economic Research, the National Institute on Aging, and the Institute for Policy Research at Northwestern University is gratefully acknowledged. The MedPAR data are confidential and cannot be released.
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ISSN:1058-6407
1530-9134
DOI:10.1111/j.1530-9134.2005.00072.x