Working Paper: NBER ID: w27274
Authors: Thomas G. Wollmann
Abstract: US antitrust authorities are only notified of large mergers, so most transactions could escape antitrust scrutiny. I study premerger notification exemptions in the dialysis industry. I find that, in sharp contrast to reportable mergers, exempt ones almost completely avoid enforcement. As a result, exempt mergers increase concentration and reduce healthcare quality, as measured by hospitalization and mortality rates. I then estimate a structural model to simulate the equilibrium response of demand, quality, and enforcement to the elimination of exemptions. I find that the benefits of eliminating exemptions in the dialysis industry far exceed the costs.
Keywords: mergers; antitrust enforcement; healthcare; dialysis; premerger notifications
JEL Codes: D4; D43; I11; K21; L0; L11; L13; L4; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| premerger notifications (L49) | effective antitrust enforcement (K21) |
| effective antitrust enforcement (K21) | divestiture rates (G34) |
| premerger notifications (L49) | prevention of harmful market consolidations (L41) |
| enforcement actions from premerger notifications (K21) | long-lasting positive effects on market structure (D40) |
| divestitures (G34) | preservation of competition (L49) |
| exempt facility acquisitions (R53) | negative impacts on patient health outcomes (I14) |
| lack of enforcement against exempt mergers (K21) | harmful consolidation (Y50) |
| harmful consolidation (Y50) | poorer healthcare quality (I14) |
| stronger enforcement through premerger notifications (L41) | improved healthcare outcomes (I14) |