Nonprofit and For-profit Providers in Japan's At-home Care Industry: Evidence on Quality of Service and Household Choice
AbstractIn 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 InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-73.
Date of creation: Feb 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-20 (All new papers)
- NEP-HEA-2005-02-20 (Health Economics)
- NEP-SEA-2005-02-20 (South East Asia)
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