UC Irvine

The first chapter considers returns-to-scale in the liver transplant market. This chapter improves on the measurement of the learning effects by correlating mortality rates with only measures of previous volume, rather than with measures of current year volume. This chapter also investigates the impact of Medicare certification of liver transplant centers on those centers' market shares of the transplant market. I find no statistically significant relationship between previous transplant volume and the 1-year mortality rate.

Chapter 2 considers the affects of returns-to-scale in group formation. I develop a model of club competition in which the competitor arises from within the group. Clubs overcome the free-rider problem by restricting members' activity outside the group, and groups compete by choosing how restrictive they are. I find that club good production decreases (relative to no competition) if the competitor chooses a lower restriction level, and production increases if the competitor chooses a restriction higher than the incumbent. In each case members are worse off. The main determinant of a split being successful is the fixed cost of breaking away. If this cost is high, the likelihood of splitting decreases.

Chapter 3 explores how returns-to-scale can affect solutions to problems of asymmetric information. I use the examples of mutual aid societies and medical tourism to illustrate the implications in the health care market.