Does Market Power Encourage or Discourage Investment? Evidence from the Hospital Market
利用美国医院的投资税收冲击和全样本数据，研究发现市场集中度越高的医院对税收激励的投资反应越大，竞争反而抑制投资。
Does market power encourage or discourage investment? This is an open question due to theoretical ambiguity and empirical difficulties. The answer is particularly important in the hospital market, where market power has increased dramatically since the 1990s. To answer this, we exploit an investment tax shock and data on the universe of US hospitals. We find a negative relationship between competition and investment. In particular, hospitals in concentrated markets increased investment by 5.1 percent ($2.5 million) more than firms in competitive markets in response to tax incentives. Further, firms’ investment responses monotonically increased with market concentration.