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Buyer power and price discrimination: the case of the UK care homes market

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  • Hancock, Ruth
  • Hviid, Morten

Abstract

UK Local Authorities purchase care home places on behalf of a large group of people following a means test of their income and wealth. All other buyers of care home services are atomistic. The care home market is characterised by a large number of small providers. Local authorities may thus have buyer power. We show that any abuse of this buyer power may lead to some people, 'the squeezed middle' not being served. We quantify the size of the squeezed middle and assess the implications of the form of the means test for local authorities' ability to exercise buyer power.

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  • Hancock, Ruth & Hviid, Morten, 2010. "Buyer power and price discrimination: the case of the UK care homes market," ISER Working Paper Series 2010-39, Institute for Social and Economic Research.
    • Handle: RePEc:ese:iserwp:2010-39
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    File URL: https://www.iser.essex.ac.uk/wp-content/uploads/files/working-papers/iser/2010-39.pdf
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    Cited by:

    1. Hancock, Ruth & Malley, Juliette & Wittenberg, Raphael & Morciano, Marcello & Pickard, Linda & King, Derek & Comas-Herrera, Adelina, 2013. "The role of care home fees in the public costs and distributional effects of potential reforms to care home funding for older people in England," Health Economics, Policy and Law, Cambridge University Press, vol. 8(1), pages 47-73, January.
    2. Bilotkach, Volodymyr & Braakmann, Nils & Gonzalo-Almorox, Eduardo & Wildman, John, 2017. "The effect of house prices on the long-term care market: Evidence from England," MPRA Paper 81987, University Library of Munich, Germany.

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