Market Structure and Cross-Sector Competitive Effects in Wisconsin Nursing Homes, 1992-2002

Abstract

This study incorporates market-level fixed effects into an analysis of panel data from Wisconsin to assess whether competitor market share influences choices of price and quality at for-profit and nonprofit nursing homes. The measured competitive effects are quite small, both between firms of the same ownership type and between firms of different types. A distinction is made between incumbent expansion (contraction) and entry (exit). Entering and exiting nursing homes engage in significantly different conduct than do incumbents, with entering nonprofits producing higher quality at lower prices than incumbents of either type, and exiting for-profits producing lower quality.