Wolves in sheep’s clothing: Is non-profit status used to signal quality?
File(s)
Author(s)
Jones, D
Propper, C
Smith, S
Type
Journal Article
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.
Date Issued
2017-09-01
Date Acceptance
2017-06-29
Citation
Journal of Health Economics, 2017, 55, pp.108-120
ISSN
0167-6296
Publisher
Elsevier
Start Page
108
End Page
120
Journal / Book Title
Journal of Health Economics
Volume
55
Copyright Statement
© 2017, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Sponsor
Economic & Social Research Council (ESRC)
Grant Number
ES/J023108/1
Subjects
Non-profit
Nursing homes
Quality disclosure
1402 Applied Economics
1117 Public Health And Health Services
Health Policy & Services
Publication Status
Published