Abstract We study Medicare’s competitive bidding program for durable medical equipment. We use Medicare claims data to examine the effect on prices and utilization, focusing on continuous positive airway pressure devices for sleep apnea. We find that spending falls by 47.2% after a highly imperfect bidding mechanism is introduced. This is almost entirely driven by a 44.8% price reduction, though quantities also fall by 4.3%. To disentangle supply and demand, we leverage differential cost sharing across Medicare recipients. We measure a demand elasticity of -0.272 and find that quantity reductions are concentrated among less clinically appropriate groups.

Preschool-aged children get sick frequently and spread disease to other family members. Despite the universality of this experience, there is limited causal evidence on the magnitudes and consequences of these externalities, especially for infant siblings with developing immune systems and brains. We show in Danish administrative data that during infancy, younger siblings have two to three times higher hospitalization rates for respiratory conditions than older siblings. We combine birth order and within-municipality variation in respiratory disease prevalence among young children, finding lasting differential impacts of early-life respiratory disease exposure on younger siblings' earnings, educational attainment, chronic respiratory health, and mental health-related outcomes. (JEL D13, D62, I12, J12, J13, J24, J31)