This paper studies how Medicare payment policy shapes hospital quality and patient welfare. I build a structural model of hospital quality choice and hospital–insurer bargaining in which quality increases demand from Medicare and commercial patients, affects negotiated commercial prices, and raises hospitals' costs. I estimate the model using Massachusetts Medicare and commercial claims. I find that Medicare and commercial demand respond similarly to quality, but commercial margins are much larger and negotiated commercial prices rise with quality about 17 times more than Medicare's quality adjustment. At the average hospital, commercial patients account for 81 percent of the marginal return to quality. Therefore, increases in Medicare's share, through population aging or lowering the age of eligibility, decrease equilibrium quality and average patient welfare. I show that making Medicare rates more responsive to quality can prevent this decline, but payments and quality gains concentrate at the highest-quality, highest-margin hospitals.

When prices rise after a merger, economists often attribute the increase to market power. I show a setting where this conclusion would be misleading. After Mexico deregulated retail gasoline prices in 2017, about 10 percent of gas stations in Mexico City changed ownership, and these ownership changes often coincided with brand switches, changes in upstream suppliers, and renovations. Using a difference-in-differences design, I find that merging stations raised their prices and markups. I then estimate a spatial model of gas station supply and demand and use it to decompose the increases into higher concentration, lower marginal costs, and higher station quality. Higher concentration explains less than 5 percent of the increases. Stations that switched upstream suppliers after a merger lowered their wholesale costs, which accounts for part of the higher markups, and the remaining increases are consistent with improvements in unobserved station quality. These findings highlight that post-merger price increases need not reflect market power.

We study how criminally accused candidates win three times more often than non-criminals upon nomination using data from four recent parliamentary elections in India. We write a simple model of party nomination choice, which predicts that criminals are nominated only when they are needed to win and not otherwise. Using local linear regressions, we confirm this prediction in the data. In particular, we find that the predicted probability from the ex post decision to nominate a criminal has an inverse-U relationship with a party's ex ante margin of victory. This may explain why criminal candidates are more successful than non-criminal candidates upon nomination: they are selected by political parties to do so.