Munich Personal RePEc Archive

Differential market entry determinants for for-profit and non-profit at-home care providers in large Japanese cities

Nakazawa, Katsuyoshi (2016): Differential market entry determinants for for-profit and non-profit at-home care providers in large Japanese cities.

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Abstract

Japan’s long-term care insurance system requires that for-profit and non-profit at-home care service providers provide the same services at the same prices. Both types of providers compete on completely equal terms, though they may have different determinants of entry. This study considers market entry determinants for both for-profit and non-profit at-home long-term care providers in large Japanese cities. The estimation results show that potential for-profit entrants were sensitive to issues of profit, and that potential non-profits enter disadvantaged municipalities. The net entry rates of both potential entrants have gradually declined. The results show that both providers’ entries compensate for the gap between at-home long-term care demand and supply in each religion. Non-profit entrants supplement for-profit entrants because non-profits enter regions with low profitability. However, the insurance systems will face an issue due to the increase in premiums and decrease in unit prices, which discourage new entries.

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