Nursing home choice, family bargaining, and optimal policy in a Hotelling economy

Marie-Louise Leroux and Gregory Ponthiere

Journal of Public Economic Theory, 2020, vol. 22, issue 4, 899-932

Abstract: We develop a model of family bargaining to study the impact of the distribution of bargaining power within the family on the choice of nursing homes by families, and on the locations and prices chosen by nursing homes in a Hotelling economy. In the baseline (static) model, where the dependent parent cares only about the location of the nursing home, the markup of nursing homes is increasing in the bargaining power of the dependent parent, and nursing homes are located at the extreme periphery. We compare the laissez‐faire with the social optimum (which involves more central locations of nursing homes), and examine its decentralization in first‐best and second‐best settings. We explore the robustness of our results to introducing a bequest motive in a dynamic overlapping generations model, which allows us to study the joint dynamics of wealth accumulation and nursing home prices. If the bequest motive is strong, the markup is decreasing in the bargaining power of the dependent. However, wealth accumulation, by reducing interest rates, raises markup rates and nursing homes prices.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/jpet.12327

Related works:
Working Paper: Nursing home choice, family bargaining, and optimal policy in a Hotelling economy (2020)
Working Paper: Nursing home choice, family bargaining, and optimal policy in a Hotelling economy (2020)
Working Paper: Nursing Home Choice, Family Bargaining and Optimal Policy in a Hotelling Economy (2016)
Working Paper: Nursing Home Choice, Family Bargaining and Optimal Policy in a Hotelling Economy (2016)
Working Paper: Nursing Home Choice, Family Bargaining and Optimal Policy in a Hotelling Economy (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:22:y:2020:i:4:p:899-932

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().