Journal article
Does Competition Improve Service Quality? The Case of Nursing Homes Where Public and Private Payers Coexist
Management science, v 67(10), pp 6493-6512
01 Oct 2021
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Competition plays an ambiguous role in nursing home markets where public and private payers coexist. Using U.S. nursing home data with a wide range of market structures, we find a U-shaped relationship between competition and service quality when nursing homes serve a mix of public and private segments, and a monotonically increasing relationship when nursing homes mostly serve the public, price-regulated, segment. The outcomes can be explained by the interplay of two opposing effects of competition: the reputation-building effect, whereby competing firms choose high quality to build a good reputation, and the rent-extraction effect, whereby competition hinders investment for quality improvements by lowering price premia. These observations are consistent with a repeated game model that incorporates public and private-payer segments.
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Details
- Title
- Does Competition Improve Service Quality? The Case of Nursing Homes Where Public and Private Payers Coexist
- Creators
- Susan Feng Lu - Purdue University SystemKonstantinos Serfes - Drexel UniversityGerard Wedig - University of RochesterBingxiao Wu - Soil Agro and Hydrosystems Spatialization
- Publication Details
- Management science, v 67(10), pp 6493-6512
- Publisher
- Informs
- Number of pages
- 20
- Grant note
- Gerald Lyles Rising Star Fund for the 2019-20 academic year LeBow Dean's Fellowship for R&R for the 2019-20 academic year
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000714555500008
- Scopus ID
- 2-s2.0-85117188875
- Other Identifier
- 991019169013304721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Management
- Operations Research & Management Science