In a study published by the International Journal of Industrial Organization, Christopher Lau and his coauthors analyze hospital competition within narrow network health insurance products. The article, “You’d be hard to replace: Provider competition in narrow network insurance markets,” characterizes the implications of provider mergers when narrow networks are present.
Key Insights
Merger Effects: The existence of narrow network insurance plans can lead merger-induced price effects through competitive restraint, which can potentially exceed those due to the loss of direct, head-to-head competition.
Real-World Example: The authors use an anonymized real case—a proposed acquisition that was investigated by the Federal Trade Commission—as an illustrative empirical example.
Price Effects: In the real-world example, evidence suggests that accounting for narrow networks predicted substantially larger price effects.
This paper will be published in the International Journal of Industrial Organization, Volume 106, June 2026, 103271. The views expressed herein are solely those of the authors and do not necessarily represent the views of Cornerstone Research.
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