Gary M. Fournier

Hospital Costs and Competition for Services: A Multiproduct Analysis

The authors estimate the effects of market structure on hospital costs using a translog multiproduct cost function. Recognizing the multiplicity of services provided by hospitals, the results show that costs are substantially determined by service configuration, and that there are distinct economies of size and sco pe. The model also distinguishes market concentration measures by servic e type, including obstetrics, radiation therapy, diagnostic imaging, a nd surgery. Estimates show that, after controlling for the other determinants of cost, the degree of competition has only modest cost-increasing effects. Copyright 1992 by MIT Press.

Litigation and Settlement: An Empirical Approach

Litigants in civil lawsuits involving monetary damages often find an out-of-court settlement preferable to a trial. Most theoretical models of settlement choice employ an expected-utility-maximizing framework that emphasizes the importance of risk preferences, litigation costs, and the distribution of trial awards. An empirical model of settlement choice is used to examine whether the variables prominent in the theoretical literature are statistically useful in explaining the occurrence and monetary value of settlements. Estimates from a sample of civil filings provide new empirical evidence of how the legal system affects the behavior of litigants during the settlement process. Copyright 1989 by MIT Press.

The Timing of Out-of-Court Settlements

Parties to a lawsuit will frequently delay litigation, even in circumstances where a voluntary agreement is eventually reached. This article is concerned with what causes legal disputes to be prolonged over time. We discuss dynamic models of litigation to illustrate how changes in the bargaining environment might generate empirical hazard functions. Comparative statics results are then corroborated with empirical estimates of a hazard function adjusted to account for both the heterogeneity of lawsuits and the nonproportional time dependence suggested by theory.

Take My Course, Please: The Effects of the Principles Experience on Student Curriculum Choice

Colleges and universities ha ve experienced a dramatic decline in the number of economics majors during the 1990s. Between 1992 and 1994 alone, the number of economics degrees awarded decreased by over 20 percent (Siegfried and Scott 1994; Siegfried 1995). Although some evidence indicates that the trend may be reversing (Siegfried 1997), 1 enrollment levels are still a matter of concer n in economics departments throughout the country. Although recent research has helped to explain the general trend in economics majors, 2 existing studies pr ovide little in the way of policy guidance for eco nomics departments seeking to stem the decline in majors and in enrollment. Various modifications in the economics principles course ha ve been suggested to increase the number of economics majors. These proposals include assigning popular instructors to principles classes (Mar go and Siegfried 1996), employing more female and minority instructors to ser ve as role models (Catanese 1991), and changing the content and methodology of economics classes to make economics accessible to a broader range of students (Bartlett 1995). Ho wever, no systematic analysis has been done of the impact of these proposals on the likeli hood that students will pursue further study in economics or become an eco nomics major. 3 We used microdata on students taking economics principles courses o ver a three-year span to determine the effect of student characteristics, instructor characteristics, and structural characteristics of the principles course on a student’s subsequent decision to take additional economics classes or pursue an econom ics degree. Our focus was on variables that may be within the policy control of departments seeking to boost enrollment and increase the number of majors.

Salaries in Public Education: the Impact of Geographic Cost-of-Living Differentials

Salaries in public education are the largest single expenditure of state and local governments. In the absence of absolute standards for evaluating policy, both politicians and interest groups are likely to turn to relative performance measures. These judgments often involve comparisons of expenditure levels among states. In this article we estimate cost-of-living differentials among states and show that the state rankings of salaries in public education change substantially when salaries are adjusted for differences in purchasing power. When interstate expenditure comparisons are employed in the setting of policy goals, it is important to be cognizant of the large variations among states in the cost of living.

Work, Health, and Income among the Elderly

Contents include: Introduction and Summary Public Policy Implications of Declining Old-Age Mortality Aging the Ability to Work: Policy Issues and Recent Trends Occupational Effects on the Health and Work Capacity of Older Men Involuntary Early Retirement and Consumption Life-Cycle Labor Supply and Social Security: A Time-Series Analysis Life Insurance of the Elderly: Its Adequacy and Determinant

Cost of living differentials and elderly interstate migration.

This article replicates previous work by McLeod et al. (1984) on the determinants of state to state flows of elderly migrants in the United States. This article deals with the 1975-1980 period and finds broad similarity in the magnitude and direction of explanatory relationships. In addition, the article reports on the use of experimental state-level cost of living indicators as explanatory variables. These performed as expected with high cost of living at origin and low cost of living at destination both explaining the magnitude of state to state flows.

Elderly migration: For sun and money

Discussions about elderly migration and its implications for growth planning tend to neglect the role of economic forces. Our view is that cost-of-living variations among states give elderly households on fixed incomes an incentive to move that closely resembles the effects of wage opportunities on workers who migrate. To test this view, we employ a state-by-state index of cost of living for a retired couple to explore its impact on migration choices of the elderly. The effects of cost of living on migration are investigated in terms of the probability that an elderly person will move out-of-state during a five-year period and the probability that a given state will be chosen as destination once a decision has been made to migrate. The influences of cost of living at both origin and destination are strongly confirmed.

Does Government-Restricted Entry Produce Market Power?: New Evidence from the Market for Television Advertising

This article examines the premise that television broadcasters are able to exercise substantial market power deriving from governmental restrictions on entry. Using a new sample of actual transactions prices, we estimate a hedonic equation identifying product quality components of advertising spots. The model demonstrates the significant effect on prices of uncertainty in audience delivery, on the basis of observed expectations of the buyer and seller. Previous empirical work on advertising markets neglected these transactional elements. Thus, once the relevant features of transactions are included in the analysis, prices appear to be unrelated to measures associated with market power.

The emergence of local norms in networks

We develop an explanation of the emergence of local norms and the associated phenomenon of geographical variation in behavior. Individuals are assumed to interact locally with neighbors in an environment with a network externality. Although many patterns of behavior are possible, the dispersed interactive choices of agents are shown to select behavior that is locally uniform but globally diverse. The range of applications of the theory includes regional variation in the practice of medicine, technology choice, and corruption. The framework is also useful for further developing our understanding of important phenomena like lock-in, critical thresholds, and contagion.