The impact of regional competition on the health care industry

We investigate factors that determine firm markups by employing data on prices and quantities of various medical procedures at major hospitals in the United States. We focus on the impact of hospital quality, rival competition and the number of medical procedures upon the health care demand. Our analysis covers health-care markets across the United States with the market definition based upon the hospital referral regions. Our findings highlight potential implications of the relationship between hospital markups and market structure.