NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Silent Majority Fallacy of the Elzinga-Hogarty Criteria: A Critique and New Approach to Analyzing Hospital Mergers

Cory S. Capps, David Dranove, Shane Greenstein, Mark Satterthwaite

NBER Working Paper No. 8216
Issued in April 2001
NBER Program(s):   HC   IO

Elzinga/Hogarty inflow/outflow analysis is a mainstay of geographic market definition in antitrust analysis. For example, U.S. antitrust agencies lost several hospital merger challenges when evidence showed that a nontrivial fraction of local patients traveled outside the local community for care. We show that the existence of traveling consumers may not limit seller market power with respect to non-traveling consumers--a phenomenon we label the silent majority fallacy. We estimate a random coefficients logit model of hospital demand and use the estimates to predict the increase in price that various mergers would generate. Two distinct methods of predicting the price increase are implemented and both indicate that even in suburban areas with high outflows of consumers, some hospital mergers could lead to significant price increases.

download in pdf format
   (436 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (436 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8216

Users who downloaded this paper also downloaded these:
Dafny w11673 Estimation and Identification of Merger Effects: An Application to Hospital Mergers
Gaynor, Kleiner, and Vogt w16656 A Structural Approach to Market Definition With an Application to the Hospital Industry
Town, Wholey, Feldman, and Burns w12244 The Welfare Consequences of Hospital Mergers
Gaynor and Vogt w7112 Antitrust and Competition in Health Care Markets
Dranove, Kessler, McClellan, and Satterthwaite w8697 Is More Information Better? The Effects of 'Report Cards' on Health Care Providers
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us