Input constraints and the efficiency of entry
Subtitle: lessons from cardiac surgery
By: David M. Cutler, Robert S. Huckman, Jonathan Kolstad
Contributors: Huckman, Robert S.; Kolstad, Jonathan T.; Harvard Business School
Series: Working paper / Harvard Business School -- 10-011; Working paper (Harvard Business School) -- 10-011.
Publisher: Harvard Business School
Published: 2009
Place of publication: [Boston]
Language: eng
Number of pages: 31
Description: Prior studies suggest that, with elastically supplied inputs, free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher-quality surgeons and that this entry was approximately welfare neutral.
Notes: "August 2009"--Publisher's website.

"July 2009"--added t.p.

Includes bibliographical references.