Market Structure and Hospital-Insurer bargaining in the Netherlands

R.S. Halbersma, M.C. Mikkers, E. Motchenkova

Research output: Working paperProfessional

Abstract

In 2005, competition was introduced in part of the hospital market in the Netherlands. Using a unique dataset of transaction and list prices between hospitals and insurers in the years 2005 and 2006, we estimate the influence of buyer and seller concentration on the negotiated prices in the first two years after the institutional change. First, we use a traditional Structure-Conduct-Performance model (SCP-model) along the lines of Melnick et al. (1992) to estimate the effects of buyer and seller concentration on price-cost margins. Second, we model the interaction between hospitals and insurers in the context of a generalized bargaining model (Brooks et al., 1997). In the SCP-model, we obtain that the concentration of hospitals (insurers) has a significantly positive (negative) impact on the hospital price-cost margin. In the bargaining model, we also find a significant negative effect of insurer concentration on the bargaining share of hospital, but no significant effect of hospital concentration on the division of the gains from bargaining. In both models we find a significant impact of idiosyncratic effects on the market outcomes, consistent with the fact that the Dutch hospital sector is not yet in a long-run equilibrium.
Original languageEnglish
Place of PublicationAmsterdam
PublisherFaculty of Economics and Business Administration, Vrije Universiteit Amsterdam
Publication statusPublished - 2007

Publication series

NameResearch Memorandum
No.2007-4

Fingerprint

Insurer
The Netherlands
Market structure
Bargaining model
Buyers
Seller
Price-cost margin
Interaction
Institutional change
Long-run equilibrium

Cite this

Halbersma, R. S., Mikkers, M. C., & Motchenkova, E. (2007). Market Structure and Hospital-Insurer bargaining in the Netherlands. (Research Memorandum; No. 2007-4). Amsterdam: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam.
Halbersma, R.S. ; Mikkers, M.C. ; Motchenkova, E. / Market Structure and Hospital-Insurer bargaining in the Netherlands. Amsterdam : Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, 2007. (Research Memorandum; 2007-4).
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Halbersma, RS, Mikkers, MC & Motchenkova, E 2007 'Market Structure and Hospital-Insurer bargaining in the Netherlands' Research Memorandum, no. 2007-4, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, Amsterdam.

Market Structure and Hospital-Insurer bargaining in the Netherlands. / Halbersma, R.S.; Mikkers, M.C.; Motchenkova, E.

Amsterdam : Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, 2007. (Research Memorandum; No. 2007-4).

Research output: Working paperProfessional

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Halbersma RS, Mikkers MC, Motchenkova E. Market Structure and Hospital-Insurer bargaining in the Netherlands. Amsterdam: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam. 2007. (Research Memorandum; 2007-4).