Health economics research and antitrust enforcement.

Abstract

Antitrust analysis is typically very fact intensive, and enforcement outcomes always depend on the circumstances in particular markets. Nonetheless, there are issues of broad antitrust significance, and it is in these areas that health economics can make important contributions to enforcement policy. Indeed, health economics has already provided valuable guidance to antitrust enforcers in some areas. For example, when antitrust was first applied to hospital mergers in the early 1980s, it was sometimes argued that competition among hospitals was inherently perverse, inflating rather than restraining costs and prices. But studies of the 'California experience' with selective contracting and more careful assessment of the 'medical arms race' hypothesis provided persuasive support for applying standard antitrust presumptions to health care markets. Important new issues continue to arise. Some come from new challenges of standard presumptions in antitrust analysis, while others are attributable to changes in the rapidly evolving health care markets. These issues present new opportunities for health economists to provide guidance to antitrust enforcers and the courts. Guidance is most valuable when researchers recognize the key issues and understand the methodology with which antitrust analysts tackle competitive problems. The accompanying articles in this special issue are important contributions in these regards. In this article, we point to two recently litigated cases to highlight still other issues in which additional theoretical and empirical work by health care economists could be helpful in informing antitrust decision makers.