Working Paper: NBER ID: w31030
Authors: Jonathan I. Dingel; Joshua D. Gottlieb; Maya Lozinski; Pauline Mourot
Abstract: We uncover substantial interregional trade in medical services and investigate whether regional increasing returns explain it. In Medicare data, one-fifth of production involves a doctor treating a patient from another region. Larger regions produce greater quantity, quality, and variety of medical services, which they “export” to patients from elsewhere, especially smaller regions. We show that these patterns reflect scale economies: greater demand enables larger regions to improve quality, so they attract patients from elsewhere. Despite concerns about rural access, larger regions have higher marginal returns to spending. We study counterfactual policies that would lower travel costs rather than relocating production.
Keywords: market size; trade; medical services; healthcare consumption; economies of scale
JEL Codes: F12; F14; I11; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market size (L25) | quality of medical services (I11) |
| market size (L25) | specialization in procedures (Z00) |
| production scale (D20) | quality of medical services (I11) |
| local increasing returns (R12) | quality of medical services (I11) |