Question

In your opinion, does the Houston Medical Center, in which many hospitals gather, represent perfect competition, monopolistic competition, collusive oligopoly, or competitive oligopoly? Explain your answer in the language of economics.

Answer 1

In my opinion, The Houston Medical Center represents a collusive oligopoly market, within which, there also exists a competitive oligopoly. Collusive Oligopoly can be defined as a market where firms cooperate by mutual agreements about price, output, division of market, profits etc. In this way they represent a monopoly. Since, Houston Medical Center is the one of the largest medical centers in the world, or say the US, it operates as a leader in the medical industry. It offers a significant referral base between facilities, which makes it a collusive oligopoly and benefits the branding as a whole. However, this is also a significant amount of competition between some of the large hospitals within the center. For example Methodist, St. Luke’s, and Texas Children’s Hospital. They compete through advertising and this makes them a competitive oligopoly as well.