Here's a paper featured by Microeconomic Insights, which shows that in the highly concentrated dialysis market, in which prices are mostly federally regulated, mergers reduce competition on quality.
Thomas G. Wollmann: How to Get Away with Merger: Stealth Consolidation and Its Effects on US Dialysis
"This paper studies premerger notification of US dialysis acquisitions from 1996 to 2017. Like many industries, dialysis has consolidated rapidly. During this period, thousands of facilities changed ownership, yet only half were reported to federal antitrust authorities. Unlike most industries, dialysis prices are mostly set by the government, so acquisitions of rival facilities reduce the incentive to compete on quality. Since patients are often already in poor health, preventing stealth consolidation could save lives.
The study combines data on market structure, antitrust enforcement, and patient health. I begin by describing patterns in the data. Next, I estimate a structural model of dialysis competition, enforcement, and agency costs. Finally, I use the estimates to predict what would have happened had all dialysis mergers proposed during the study period been reportable.
Three main findings emerge.
Premerger notification is critical to effective antitrust enforcement. All else equal, exemption reduces the likelihood of enforcement by about 90%.
Exempt acquisitions that concentrate ownership degrade quality, as evidenced by higher postmerger hospitalization and mortality rates.
The benefits of expanding premerger notification exceed the costs by orders of magnitude. This reflects the deterrence effect of antitrust enforcement (i.e., rivals won’t try to merge if they know their deal will be blocked) as well as the efficiency of the Federal Trade Commission (FTC), which polices billions of dollars of dialysis transactions with very few resources."
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