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 Centre for Economic Policy Research

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)

Downloads: (external link)
https://cepr.org/publications/DP14005 (application/pdf)

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)
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:cpr:ceprdp:14005

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14005

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().