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Wolves in sheep’s clothing: Is non-profit status used to signal quality?

Research output: Contribution to journalArticle

Original languageEnglish
Number of pages13
JournalJournal of Health Economics
Early online date1 Jul 2017
DOIs
DateAccepted/In press - 29 Jun 2017
DateE-pub ahead of print (current) - 1 Jul 2017

Abstract

Why do many firms in the healthcare sector adopt non-profit status? One argument is that non-profit status serves as a signal of quality when consumers are not well informed. A testable implication is that an increase in consumer information may lead to a reduction in the number of non-profits in a market. We test this idea empirically by exploiting an exogenous increase in consumer information in the US nursing home industry. We find that the information shock led to a reduction in the share of non-profit homes, driven by a combination of home closure and sector switching. The lowest quality non-profits were the most likely to exit. Our results have important implications for the effects of reforms to increase consumer provision in a number of public services.

    Research areas

  • non-profit, Nursing homes, quality disclosure

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  • Full-text PDF (accepted author manuscript)

    Rights statement: This is the author accepted manuscript (AAM). The final published version (version of record) is available online via Elsevier at http://www.sciencedirect.com/science/article/pii/S0167629616300716?via%3Dihub. Please refer to any applicable terms of use of the publisher.

    Accepted author manuscript, 1 MB, PDF document

    Licence: CC BY-NC-ND

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