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Nursing‐homes' competition and distributional implications when the market is two‐sided

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  • David Bardey
  • Luigi Siciliani

Abstract

We investigate the effect of competition in the nursing‐homes sector with a two‐sided market approach. Using a Hotelling model, our key findings are that (i) the two‐sidedness of the market leads to higher wages for nurses, (ii) this is then passed to residents in the form of higher prices, and (iii) nursing‐homes profits are instead unaffected. In contrast, when nurses wages are regulated, the two‐sidedness of the market implies a transfer between residents and nursing homes. When residents' price is regulated, it implies a transfer between nurses and nursing homes. These key results are generally robust to institutional settings which employ pay‐for‐performance schemes, the presence of altruistic motives of nursing homes and the heterogeneity in residents reservation utility.

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  • David Bardey & Luigi Siciliani, 2021. "Nursing‐homes' competition and distributional implications when the market is two‐sided," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 472-500, May.
    • Handle: RePEc:bla:jemstr:v:30:y:2021:i:2:p:472-500
    DOI: 10.1111/jems.12415
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    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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