TY - JOUR AU - Dafny, Leemore AU - Ho, Kate AU - Lee, Robin S TI - The Price Effects of Cross-Market Hospital Mergers JF - National Bureau of Economic Research Working Paper Series VL - No. 22106 PY - 2016 Y2 - March 2016 DO - 10.3386/w22106 UR - http://www.nber.org/papers/w22106 L1 - http://www.nber.org/papers/w22106.pdf N1 - Author contact info: Leemore Dafny Harvard Business School Morgan Hall 247 Soldiers Field Boston, MA 02163 Tel: 617/495-2416 E-Mail: ldafny@hbs.edu Kate Ho Princeton University Department of Economics 237 Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: kate.ho@princeton.edu Robin S. Lee Department of Economics Harvard University Littauer Center 120 Cambridge, MA 02138 Tel: 617-495-2997 E-Mail: robinlee@fas.harvard.edu AB - We consider the effect of mergers between firms whose products are not viewed as direct substitutes for the same good or service, but are bundled by a common intermediary. Focusing on hospital mergers across distinct geographic markets, we show that such combinations can reduce competition among merging hospitals for inclusion in insurers' networks, leading to higher prices (or lower-quality care). Using data on hospital mergers from 1996-2012, we find support that this mechanism operates within state boundaries: cross-market, within-state hospital mergers yield price increases of 7-9 percent for acquiring hospitals, whereas out of state acquisitions do not yield significant increases. ER -