Industrial Organization of Health Care Markets
In this paper we outline the tools that have been developed to model and analyze competition and regulation in health care markets, and describe particular papers that apply them to policy-relevant questions. We focus particularly on the I.O. models and empirical methods and analyses that researchers have formulated to address policy-relevant questions, although we also provide an overview of the institutional facts and findings that inform them. We divide the chapter into two broad sections: (i) papers considering competition and price-setting among insurers and providers and (ii) papers focused specifically on insurance and market design. The former set of papers is largely concerned with models of oligopolistic competition; it is often focused on the US commercial insurance market where prices are market-determined rather than being set administratively. The latter focuses on insurance market design with an emphasis on issues raised by asymmetric information, leading to adverse selection and moral hazard. In addition, we discuss the literature on consumer choice frictions in this market and the significant implications of those frictions for I.O. questions.
This manuscript is an invited chapter for the forthcoming volume of the 4th Handbook of Industrial Organization by Elsevier. We are grateful to Jason Abaluck, Zarek Brot-Goldberg, David Dranove, Martin Gaynor, Soheil Ghili, Gautam Gowrisankaran, Michael Geruso, Jonathan Holmes, Robin Lee, Mark Shepard, Amanda Starc and Robert J Town, for very helpful comments on earlier drafts. We thank Catherine Che, Yuki Ito, Yikun Jiang and Matteo Saccarola for excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June. citation courtesy of