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Applying conventional horizontal merger enforcement rules to nonpro¢t hospitals is controversial. Critics contend that the di¡erent objective function of not-for-pro¢ts entities should mitigate competitive concerns about mergers involving nonpro¢t hospitals. We analyze a merger that reduced the number of competitors (both nonpro¢t) in the alleged relevant market from three to two. We ¢nd that the transaction was followed by signi¢cant price increases; we reject the hypothesis that these price increases re£ect higher postmerger quality. This study should help policymakers assess the validity of current merger enforcement rules, especially as they apply to notfor-pro¢t enterprises.

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