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Suppose the relevant market definition for a nursing home is the zip code. Consult the (https://www.medicare.gov/care-compare/?providerType=NursingHome&redirect=true) website developed by Medicare. Choose two geographically adjacent nursing
- Suppose the relevant market definition for a nursing home is the zip code. Consult the (https://www.medicare.gov/care-compare/?providerType=NursingHome&redirect=true) website developed by Medicare. Choose two geographically adjacent nursing home markets that have both for-profit and not-for-profit nursing homes and compute the Herfindahl-Hirschman Index (HHI) for each market based on the number of licensed beds. In each market, what percentage of the nursing homes are for-profit? In writing, explain what your results tell you about the degree of market concentration in each market. What do the HHI figures tell you about any potential price differences that may exist across the two markets? Now recalculate the HHI assuming that the two zip codes constitute one market. Has HHI changed? Why?
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