Litigants in civil lawsuits involving monetary damages often find an out-of-court settlement preferable to a trial. Most theoretical models of settlement choice employ an expected-utility-maximizing framework that emphasizes the importance of risk preferences, litigation costs, and the distribution of trial awards. An empirical model of settlement choice is used to examine whether the variables prominent in the theoretical literature are statistically useful in explaining the occurrence and monetary value of settlements. Estimates from a sample of civil filings provide new empirical evidence of how the legal system affects the behavior of litigants during the settlement process.

Hospitals expend considerable resources each year to provide health care to the poor. Why do some hospitals voluntarily take on a disproportionate burden of this care? Our view is that the burdened hospitals are not simply altruistic. They are indirectly compensated for this expense with legal protections against competition under certificate-ofneed (CON) regulation. We test this hypothesis in a recursive model, explaining which hospitals are likely to win CON approval. The results indicate that, controlling for the endogeneity of indigent care, regulators in Florida systematically awarded licenses to hospitals providing greater amounts of care to the poor.

The authors estimate the effects of market structure on hospital costs using a translog multiproduct cost function. Recognizing the multiplicity of services provided by hospitals, the results show that costs are substantially determined by service configuration, and that there are distinct economies of size and sco pe. The model also distinguishes market concentration measures by servic e type, including obstetrics, radiation therapy, diagnostic imaging, a nd surgery. Estimates show that, after controlling for the other determinants of cost, the degree of competition has only modest cost-increasing effects.