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Nonprofit and For-profit Providers in Japan's At-home Care Industry: Evidence on Quality of Service and Household Choice

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Author Info

  • Haruko Noguchi
  • Satoshi Shimizutani

Abstract

In 2000, government deregulation along with the introduction of the long-term insurance scheme for the first time allowed for-profit providers of at-home care for the elderly to compete directly with nonprofit operators. According to the contract failure hypothesis, we would expect consumers to prefer nonprofit providers over their for-profit counterparts as a result of information asymmetry and non-distributional constraints. This study takes advantage of household level data to examine whether households' choice of care provider is biased toward nonprofits. We find that nonprofit providers to command a larger market share, but this is at least partly explained by having operated in the market longer and by continuing restrictions in medical and institutional care that confer various advantages on nonprofit providers. However, we do find that user with better knowledge of providers tend to favor for-profit providers, suggesting that measures to reduce information asymmetries may help to provide a more level playing field.

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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-73.

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Date of creation: Feb 2005
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Handle: RePEc:hst:hstdps:d04-73

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Postal: 2-1 Naka, Kunitachi City, Tokyo 186
Phone: +81-42-580-8327
Fax: +81-42-580-8333
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Web page: http://www.ier.hit-u.ac.jp/
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References

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  1. David Easley & Maureen O'Hara, 1983. "The Economic Role of the Nonprofit Firm," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 531-538, Autumn.
  2. Newhouse, Joseph P, 1970. "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review, American Economic Association, vol. 60(1), pages 64-74, March.
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Cited by:
  1. Noguchi, Haruko & Shimizutani, Satoshi, 2007. "Nonprofit/for-profit status and earning differentials in the Japanese at-home elderly care industry: Evidence from micro-level data on home helpers and staff nurses," Journal of the Japanese and International Economies, Elsevier, vol. 21(1), pages 106-120, March.
  2. Matthew A. COLE & Robert J R ELLIOTT & OKUBO Toshihiro & Eric STROBL, 2013. "The Future of Long-term Care in Japan," Discussion papers 13064, Research Institute of Economy, Trade and Industry (RIETI).
  3. Noguchi, Haruko & Shimizutani, Satoshi, 2009. "Supplier density and at-home care use in Japan: Evidence from a micro-level survey on long-term care receivers," Japan and the World Economy, Elsevier, vol. 21(4), pages 365-372, December.
  4. Katsuyoshi Nakazawa, 2013. "Differential market entry determinants for for-profit and nonprofit long-term care providers," MAGKS Papers on Economics 201313, Philipps-Universit├Ąt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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