Quality choice and market structure: : A dynamic analysis of nursing home oligopolies

• Autores: Haizhen Lin
• Localización: International economic review, ISSN-e 1468-2354, Vol. 56, Nº. 4, 2015, págs. 1261-1290
• Idioma: inglés
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• Resumen

  • This article develops a dynamic model of entry and exit to analyze quality choice and oligopoly market structure in the nursing home industry. I find significant heterogeneity in the competitive effects across market structures: Firms of similar quality levels compete more strongly than dissimilar firms. Sunken entry costs are extremely large, and quality adjustment behavior is governed by significant fixed adjustment costs. A proposal to eliminate low-quality nursing homes is found to cause a large supply-side shortage, and another proposal to lower entry costs has offered a perverse incentive to provide low quality of care