Essay on Long-Term Investment Decisions

1425 Words May 15th, 2013 6 Pages
Stephanie Piris
ECO 550
Dr. Gerace
Assignment 4
December 20, 2012

Long-term Investment Decisions

1. Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation. In a free market economy, buyers and sellers freely trade with each other according to their own self-interest and the laws of supply and demand. Competitive market forces efficiently allocate resources. The role of government is limited to controlling the law and order of a country, but most people agree that society needs some form of government regulation and public policy in order to balance public and private interests and promote economic growth. One major
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Hospital mergers are clearly presenting antitrust concerns which convey the more compelling strategies that hospitals are using to offset federal antitrust concerns used by the federal agencies, Federal Trade Commission (FTC) and Department of Justice (DOJ). FTC and DOJ’s likelihood of contesting a merger is now based on the merging hospitals' ability to provide strong evidence of substantial savings resulting from a merger. Further, evidence indicates that states are taking on increasing authority for the oversight of hospital mergers. This federalism trend suggests that consumer protection for hospital mergers may be enhanced through a combination of federal and state oversight measures. Traditional antitrust analysis of horizontal consolidations has focused on increased market power, which results from rising market share. Mergers have been considered illegal if they resulted in market power increases great enough to allow nontransitory increases in hospital prices (Spang, Bazzoli, and Arnould, 2001).
Health care restructuring has not been limited to hospitals. Health insurers have also undergone a series of mergers, with increases in concentration. Hospitals and physicians argue that buyer-side monopolies or monopsonies should be scrutinized for anticompetitive effects. Antitrust law is concerned about monopsony as well as monopoly, since both can depress output and impair allocative efficiency.
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