Evaluating substitutes for federal antitrust: The case of COPAs

Are state-imposed behavioral remedies effective substitutes for federal antitrust enforcement? We evaluate state regulation of hospital mergers under Certificates of Public Advantage (COPAs). Using hospital data from 1996–2022, we estimate the treatment effect of mergers for both COPA-regulated events and unregulated but similar anticompetitive events, each relative to non-merging controls. The difference between the two treatment effects isolates the impact of state-imposed behavioral remedies: in highly concentrated markets, COPA mergers result in an 11.1 p.p. lower price effect but a 0.5 p.p. greater 30-day mortality effect. We find a negative correlation between price and mortality effects for COPA mergers, consistent with theoretical predictions that binding price caps exacerbate quality deterioration. Our findings suggest that COPA contracts are poor substitutes for traditional antitrust enforcement.