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2014-03 Prices and quantities in health care antitrust damages

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posted on 2023-08-05, 10:38 authored by R. Forrest McCluer, Martha A. Starr

Antitrust analysis conventionally assumes that illegal agreements among competitors raise prices and lower quantities, relative to lawful competition. However, markets for healthcare services have tendencies towards overprovision, which may increase when competition declines. This paper examines this possibility using data from a well-known antitrust case in Wisconsin. We find that, in parts of the state where physician groups illegally divided up markets, costs of physician services rose by about 10% more than they did elsewhere, with about half of this increase due to increased services. This suggests that higher quantities can contribute to healthcare antitrust damages, along with higher prices.

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American University

Notes

Working Paper Series No. 2014-3 January 2014

Handle

http://hdl.handle.net/1961/auislandora:70538

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