Evolving Measures of Provider Market Power
Many researchers assess the impact of provider market structure and market power on outcomes such as price. These studies use a variety of measures of structure and power, ranging from ad hoc measures often based on census boundaries to structural measures derived from economic models of provider-payer bargaining. We explain the shortcomings of ad hoc measures, and, through a series of “horse races” show that one leading structural measure, the “Willingness to Pay,” is a consistently better predictor of prices.
Dranove, David and Christopher Ody. 2015. Evolving Measures of Provider Market Power. American Journal of Health Economics. 2(2): 145-160.