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Entry Decisions And Asymmetric Competition Between Non‐Profit And For‐Profit Homes In The Long‐Term Care Market

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  • Iris Grant
  • Iris Kesternich
  • Johannes Van Biesebroeck

Abstract

Demand for long‐term care services is growing strongly. Using a rich administrative data set for Germany, we examine strategic interaction between nonprofit and for‐profit nursing homes. The estimated competitive effects imply that competition is much stronger within type, suggesting that they provide differentiated products. Over time, the entry behavior of for‐profit homes has converged to that of the more established nonprofits and between‐type competition has become stronger. Counterfactual simulations of proposed changes in government policy indicate that even moderate changes have a large impact on the fraction of markets that remain unserved or only served by a single type.

Suggested Citation

  • Iris Grant & Iris Kesternich & Johannes Van Biesebroeck, 2022. "Entry Decisions And Asymmetric Competition Between Non‐Profit And For‐Profit Homes In The Long‐Term Care Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 631-670, May.
    • Handle: RePEc:wly:iecrev:v:63:y:2022:i:2:p:631-670
    DOI: 10.1111/iere.12544
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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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