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1 Ekonomický časopis (Journal of Economics)

1 2022

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ENTRY AND COMPETITION OF HEALTHCARE PROVIDERS IN SLOVAKIA: A SPATIAL ANALYSIS

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Lábaj M. , Mandžák P.

Ekonomický časopis (Journal of Economics)

2022

tom 70

nr 3

211 – 236

We study the relationship between market size and the number of firms in several healthcare professions in Slovakia to provide new evidence about their entry decisions and the toughness of competition on the market. The local market size that would support the entry of the first general practitioner was estimated at 1,400 inhabitants. This threshold equalled 1,700 inhabitants for the first pharmacy to enter and 2,300 for pediatricians. The population would have to more than double for the second professional to enter. To support the second firm, the population per firm in the market would have to increase by 30% for pharmacies, 25% for general practitioners, and almost 40% for pediatricians. However, after the entry of the second firm, the intensity of competition did not change, except for pediatricians. The results were robust to spatial interactions. Our estimates of spatial interactions showed negative spatial spill over effects for pharmacies, general practitioners, and dentists from 1995 to 2010. In this period, competitive effects prevailed and outweighed demand spill overs. We document that the demand effect continued to grow after 2010 and in 2017 outweighed the competition effect for pharmacies. We show that an increase in the total number of pharmacies since 2010 led to diffusion into smaller markets and that the number of markets without a pharmacy decreased.