Information linkages in regional market networks with applications to healthcare markets

Abstract

The spatial availability of information as a determinant of consumer choice and export sales is analyzed along with other spatial-economic determinants of export competition. A spatial interaction framework is applied to two alternative specifications; a pair-wise model of information dominance and a spatially dispersed information model for consumers located in different market areas. Model estimates of the role of spatial availability of information, market power, distance, and populati on demand thresholds on export sales are based on national data from The Dartmouth Atlas of Health Care. The regional application is for Medicare health exports from the Seattle hospital market to markets throughout the state of Washington. Information availability increases export sales of hospital Medicare services with the strongest impact occurring for the pair-wise model of information dominance. The spatially dispersed information model shows a smaller and less significant impact of information availa bility on export sales. Distance between Seattle and export markets has a strong, negative effect on export sales and on intra-regional patient mobility. Market power within the Seattle center exerts a positive impact on sales and mobility.