https://pages.stern.nyu.edu/~lcabral/publications/IJIO%202000.pdf

R&D cooperation and product market competition

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of regulated monopolies, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of incresed competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density redices waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferrable to regulated monopolies only if the (regulated) treatment price is sufficiently higher.

Competition and Waiting Times in Hospital Markets

This paper analyzes the interaction of financing and output market decisions in a duopoly in which one firm is financially constrained and can borrow funds to finance production costs. Two ideas have been analyzed separately in previous work: some authors argue that debt strategically affects a firm's output market decisions, typically making it more aggressive; others argue that the threat of bankruptcy makes debt financing costly, typically making a firm less aggressive. Our model integrates both ideas; moreover, unlike most previous work we derive debt as an optimal contract. Compared with a situation in which both firms are unconstrained, the constrained firm produces less, while its unconstrained rival produces more; prices are higher for both firms. Both firms' outputs depend on the constrained firm's internal funds; the relationship is U-shaped for the constrained firm and inversely U-shaped for its unconstrained rival. The unconstrained rival has a higher market share, not because of predation but because of the cost disadvantage of the financially constrained firm.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID246992_code254274.pdf?abstractid=246992

Financial Constraints and Product Market Competition: Ex-ante vs. Ex-post Incentives

In countries where health care is publicly provided and where equity considerations play an important role in policy decisions, it is often argued that an increase in co-payments is unacceptable as it will be particularly harmful to the less well-off in society. The present paper derives socially optimal co-payments in a simple model of health care where people differ in income and in severity of illness. The social optimum depends on the welfare weights given to persons with different levels of expected utility. Increased concern for equity may increase optimal co-payments for illnesses with homogeneous severity across the population. For illnesses where the severity varies strongly across the population, optimal co-payments go down as a response to increased concern for equity, provided income differences in the society are sufficiently small.

Concerns for Equity and the Optimal Co-Payments for Publicly Provided Health Care

We study whether local economic conditions in different areas have an impact on the magnitude and direction of the concentration process of a banking industry By using probit and count data (ZIP) models to study the consolidation of the Italian banking sector in the second half of the 1990s, we document a significant direct impact of the local ‘business environment’ on the concentration of the industry at the regional level This effect complements the well known indirect effect of macroeconomic characteristics on the profitability and efficiency of banks We also show that institutional and organizational variables affect the likelihood and number of M&A deals, and help explaining differences in performance Our results appear to be robust to different specifications, and to a number of robustness checks, including alternative sets of variables defining local ‘business environment conditions’

/pdf/the-role-of-the-local-business-environment-in-banking-4bmhsr2nzi.pdf

The Role of the Local Business Environment in Banking Consolidation

We analytically characterize the effects of ownership and competition in the healthcare industry on quality provision, market coverage and optimal reimbursement policy. A for-profit monopoly selects a lower quality than a nonprofit supplier, and the socially optimal reimbursement rate with a nonprofit monopoly exceeds that with a for-profit monopoly. We establish that the optimal repayment policy is invariant to the introduction of competition by a for-profit high-quality supplier. Thus, market coverage is invariant to the introduction of competition, whereas consumers with a higher willingness to pay for quality are better off with competition.

/pdf/optimal-reimbursement-policy-in-health-care-competition-3xl9lt5lhf.pdf

Optimal Reimbursement Policy in Health Care: Competition, Ownership Structure and Quality Provision

Competition policy in most industrial countries allows for and even encourages research joint ventures. A research joint venture (RJV) is a contractural arrangement whereby the partners share in the costs and benefits of the research. RJVs are a way in which research funds can be leveraged and a way to mitigate appropriability problems associated with the public goods aspect of the knowledge created through research. The contractual agreements which form the basis of RJVs can take a number of forms. These agreements can irreversibly specify the allocation over time of the outlays of the resources of the partners. Alternatively, RJVs can be based on flexible agreements where the funding is subject to periodic review by the partners. In this chapter we study how the investments of RJVs in cost-reducing R&D are affected by the degrees of commitment implied by the contractual arrangements. We also investigate the main implications for the cost efficiency of the industry as well as the corresponding welfare effect.

Commitment and Efficiency in Research Joint Ventures

We explore theoretically and empirically the strategic relationship between the investments undertaken by imperfectly competing firms without restricting the nature of product market imperfections. We establish a theoretical relationship between capital structure and the strategic interaction of investments. We find that increases in a firm’s internal capital will increase (decrease) rival investments if and only if the debt-financed investment decisions are strategic complements (substitutes). This relationship is supported by COMPUSTAT panel data estimates of the two largest firms in 71 industries from 1978 to 1996. Using instrumental variable techniques we find evidence that investments are predominantly strategic complements.

Capital Structure and Strategic Investment Competition: Theory and Empirical Evidence

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Optimal Reimbursement Policy in Health Care: Competition, Ownership Structure and Quality Provision

Commitment and Efficiency in Research Joint Ventures

Capital Structure and Strategic Investment Competition: Theory and Empirical Evidence