Entry decisions and asymmetric competition between non-profit and for-profit homes in the long-term care market
Johannes Van Biesebroeck and
Iris Grant
Authors registered in the RePEc Author Service: Iris Kesternich
No 14005, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
Mostly due to population aging, the demand for long-term care (LTC) services is growing strongly. Historically, non-profit nursing homes dominated the German LTC market, but the recent entry wave was tilted towards for-profit competitors. Using a rich administrative dataset on all LTC facilities in Germany, we examine strategic interaction between these two ownership types in a static entry model. The estimates of competitive effects imply that non-profit and for-profit homes are substitutes, but competition is much stronger within-type, suggesting that they provide differentiated products. For-profit homes in particular act as if they operate in a different market segment, but over time their entry behavior has converged to that of the more established non-profits. Counterfactual simulations of proposed changes in government policy suggest a large impact on the fraction of markets that remain unserved or only served by a single type.
Keywords: Competition; Long-term care; Non-profit; For-profit (search for similar items in EconPapers)
JEL-codes: I11 L13 L22 L33 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-age, nep-com, nep-hea and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
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Related works:
Journal Article: ENTRY DECISIONS AND ASYMMETRIC COMPETITION BETWEEN NON‐PROFIT AND FOR‐PROFIT HOMES IN THE LONG‐TERM CARE MARKET (2022) 
Working Paper: Entry decisions and asymmetric competition between non-profit and for-profit homes in the long-term care market (2020) 
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