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New Approaches to Identifying Market Power in Health Care
Is the willingness-to-pay (WTP) approach valid and should it therefore replace the current analytic method used by courts in health care antitrust analysis? The researchers validated and disseminated a new model (WTP approach) to assess market power and potential anticompetitive effect of hospital mergers. They posited that the current analytic method used by courts (referred to as the Elzinga and Hogarty (E/H) approach) is outmoded and theoretically unsound, but remains popular because no alternative exists. The researchers (1) validated the relationship between WTP and provider prices; and (2) measured the relationship between (a) the increase in WTP that results from mergers, and (b) the increase in prices that results from mergers. The researchers believe that the implementation of a new model ensured that the competitive approach to health care delivery has a reasonable chance of succeeding.
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