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The impact of competition on quality and prices in the English care homes market

Julien Forder and Stephen Allan

Journal of Health Economics, 2014, vol. 34, issue C, 73-83

Abstract: This study assesses the impact of competition on quality and price in the English care/nursing homes market. Considering the key institutional features, we use a theoretical model to assess the conditions under which further competition could increase or reduce quality. A dataset comprising the population of 10,000 care homes was used. We constructed distance/travel-time weighted competition measures. Instrumental variable estimations, used to account for the endogeneity of competition, showed quality and price were reduced by greater competition. Further analyses suggested that the negative quality effect worked through the effect on price – higher competition reduces revenue which pushes down quality.

Keywords: Nursing homes; Competition; Quality; Instrumental variables; Product differentiation (search for similar items in EconPapers)
JEL-codes: I11 L11 C33 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:34:y:2014:i:c:p:73-83

DOI: 10.1016/j.jhealeco.2013.11.010

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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