Brian McManus

THE EFFECTS OF INSURANCE MANDATES ON CHOICES AND OUTCOMES IN INFERTILITY TREATMENT MARKETS

For the 10% to 15% of American married couples who experience reproductive problems, in vitro fertilization (IVF) is the leading technologically advanced treatment procedure. However, IVFs expense may prevent many couples from receiving treatment, and those who are treated may take an overly aggressive approach to reduce the probability of failure. Aggressive treatment, which occurs through an increase in the number of embryos transferred during IVF, can lead to medically dangerous multiple births. We evaluated the principle policy proposal-insurance mandates-for improving IVF access and outcomes. We used data from US markets during 1995-2003 to show that broad insurance mandates for IVF result in not only large increases in treatment access but also significantly less aggressive treatment. More limited insurance mandates, which may apply to a subset of insurers or provide weaker guidelines for insurer behavior, generally have little effect on IVF markets.

COMPETITION AND CROWDING OUT IN THE MARKET FOR OUTPATIENT SUBSTANCE ABUSE TREATMENT

U.S. markets for outpatient substance abuse treatment (OSAT) include for-profit, nonprofit, and public clinics. We study OSAT provision using new methods on equilibrium market structure in differentiated product markets. This allows us to describe clinics as heterogeneous in their objectives, their responses to exogenous market characteristics, and their responses to one another. Consistent with crowding out of private treatment, we find that markets with public clinics are less likely to have private clinics. In markets with low insurance coverage, low incomes, or high shares of nonwhite addicts, however, public clinics are relatively likely to be the sole willing providers of OSAT.

Technology Diffusion and Market Structure: Evidence from Infertility Treatment Markets

We study how market structure influenced the diffusion of new treatment technology (ICSI) among U.S. fertility clinics that performed in vitro fertilization (IVF). We find that competitive (i.e., non-monopoly) markets were more likely to have a clinic that offered ICSI than monopoly markets. Our results account for the potential endogeneity of market structure with respect to entry-foreclosing technology adoption and unobserved market characteristics that might increase the return from offering ICSI. We also provide evidence that ICSI diffused faster to competitive markets because the returns from the new technology were greater there. Early-adopting clinics in competitive markets experienced a significant increase in size, while early-adopting monopoly clinics did not. However, monopoly clinics that adopted ICSI soon after its invention were more likely to delay the entry of rival firms than monopolists that adopted ICSI later.

Two-Part Pricing with Costly Arbitrage

This paper considers the optimal two-part pricing strategy of a monopolist whose customers collude when they purchase the firms product. In contrast to the sentiment in the existing price discrimination literature, I find that a monopolists profit can actually increase when consumers share its good. When transaction costs for collusion are zero the firm can extract the full consumer surplus through two-part prices. When transaction costs are positive or there are a substantial number of consumers without access to resale, the firm may be hurt by arbitrage.

The Impact of Socioeconomic and Cultural Differences on Online Trade

We use U.S. eBay data to investigate how trade is influenced by differences in socioeconomic characteristics, tastes, and trust. States’ similarity in cultural characteristics (ethnicity, religious affiliations, and political behavior) is predictive of online trade; cultural similarity similarly predicts trade between finer (three-digit zip code) geographies. The culture-trade relationship is mediated in part by consumers’ tastes, and is stronger for transactions with sellers who lack extensive reputations or certification, suggesting that consumers infer seller trustworthiness from cultural similarity. There is no correlation between cultural similarity and buyer satisfaction, consistent with perceived differences in trustworthiness not being validated by actual transactions. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Competition and Crowding-Out among Public, Non-Profit, and For-Profit Organizations: Evidence from Outpatient Substance Abuse Treatment

U.S. markets for outpatient substance abuse treatment (OSAT) include clinics that are private for-profit, private non-profit, and public (i.e., government-run). We study the market structure of OSAT using recently-developed methods from the empirical industrial organization literature on equilibrium market structure in differentiated product markets. These methods allow us to describe OSAT clinics as heterogeneous in their objectives, their responses to exogenous market characteristics, and their responses to one another. We find that the presence of a public clinic in a market reduces the probability that a private clinic will also participate in the market, which is consistent with crowding-out between public and private provision of OSAT. Crowding out appears to be more prevalent in markets with larger white populations.