Bureau of Economics: Working Papers -
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Published on: 8/22/2000
Last Visited: 9/2/2000
Michael G. Vita (FTC) and Seth Sacher (Charles River Associates)Abstract : Applying conventional horizontal merger enforcement rules to mergers of nonprofit hospitals is controversial.Critics contend that the different objective function of not-for-profits entities should mitigate, and possibly eliminate, competitive concerns about mergers involving nonprofit hospitals.We provide evidence relevant to this debate by analyzing ex post a horizontal merger in a concentrated hospital market.Here, the transaction reduced the number of competitors (both nonprofit) in the alleged relevant market from three to two.We find that the transaction resulted in significant price increases ; we reject the hypothesis that these price increases reflect higher post-merger quality.This study should help policymakers assess the validity of current merger enforcement rules, especially as they apply to not-for-profit enterprises. [ PDF 88K ].
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Michael G. Vita, July 21, 1999, DATE : [ 07/21/1999 ]
Abstract : Gasoline divorcement regulations restrict the integration of gasoline refiners and retailers.Theoretically, vertical integration can harm competition, making it possible that divorcement policies could increase welfare ; alternatively, these policies may reduce welfare by sacrificing efficiencies.This paper attempts to differentiate between these possibilities by estimating a reduced form equation for the real retail price of unleaded regular gasoline.I find that divorcement regulations raise the price of gasoline by about 2.7ยข per gallon, reducing consumers' surplus by over $ 100 million annually.This finding suggests that current proposals to further separate gasoline retailing from refining will be harmful to gasoline consumers. [ PDF 60K ].
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