Does Competition Improve Service Quality? The Case of Nursing Homes Where Public and Private Payers Coexist

• 成果类型: Article
• 署名作者: Lu, Susan Feng; Serfes, Konstantinos; Wedig, Gerard; Wu, Bingxiao
• 署名单位: Purdue University System; Purdue University; Drexel University; University of Rochester; Rutgers University System; Rutgers University New Brunswick
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3806
• 发表日期: 2021
• 页码: 6493-6512
• 关键词: competition; service quality; mixed payers; Rent extraction; reputation building; nursing homes; medicare; medicaid

摘要

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.