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Nonprofit and for-profit providers in Japan's at-home care industry: evidence on quality of service and household choice

  • Satoshi Shimizutani

    ()

    (Institute of Economic Research, Hitotsubashi University)

  • Haruko Noguchi

    ()

    (Toyo Eiwa University)

In 2000, government deregulation along with the introduction of the long-term insurance scheme 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. We take advantage of household level data to examine whether households' choice of care provider is biased toward nonprofits. We find that nonprofit providers' larger market share 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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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 9 (2005)
Issue (Month): 3 ()
Pages: 1-13

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Handle: RePEc:ebl:ecbull:eb-04i10001
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  1. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  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.
  3. Mitchell Olivia S. & PIGGOTT John & SHIMIZUTANI Satoshi, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," ESRI Discussion paper series 118, Economic and Social Research Institute (ESRI).
  4. Shimizutani, Satoshi & Suzuki, Wataru, 2007. "Quality and efficiency of home help elderly care in Japan: Evidence from micro-level data," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 287-301, June.
  5. 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.
  6. Gertler, Paul J., 1989. "Subsidies, quality, and the regulation of nursing homes," Journal of Public Economics, Elsevier, vol. 38(1), pages 33-52, February.
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