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Choice and Competition in the Welfare State: Home Care as the Ideal Quasi-market

Author

Listed:
  • Bergman, Mats A.

    (Södertörn University)

  • Jordahl, Henrik

    (Research Institute of Industrial Economics (IFN))

  • Lundberg, Sofia

    (Umeå University)

Abstract

We study a reform by which a standardized model of choice and competition was introduced in tax-financed home care in a majority of Swedish municipalities. The market for home care is of particular interest since it is close to the ideal quasi-market. For identification, we exploit the different timing of reform implementation across municipalities. We find that the introduction of free choice and free entry in home care increased perceived quality by about one quarter of a standard deviation without affecting costs. Since satisfaction is unrelated to the private market share, the underlying mechanism seems to be new choice opportunities rather than competition or an advantage of private providers.

Suggested Citation

  • Bergman, Mats A. & Jordahl, Henrik & Lundberg, Sofia, 2018. "Choice and Competition in the Welfare State: Home Care as the Ideal Quasi-market," Working Paper Series 1213, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1213
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    More about this item

    Keywords

    Choice; Competition; Privatization; Elderly care; New public management;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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