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

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Title: Wolves in sheep’s clothing: Is non-profit status used to signal quality?
Author(s): Jones, D
Propper, C
Smith, S
Item 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.
Publication Date: 1-Jul-2017
Date of Acceptance: 29-Jun-2017
URI: http://hdl.handle.net/10044/1/49446
DOI: https://dx.doi.org/10.1016/j.jhealeco.2017.06.011
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/Funder: Economic & Social Research Council (ESRC)
Funder's Grant Number: ES/J023108/1
Keywords: Non-profit
Nursing homes
Quality disclosure
1402 Applied Economics
1117 Public Health And Health Services
Health Policy & Services
Publication Status: Published
Embargo Date: 2018-07-01
Appears in Collections:Imperial College Business School



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