This paper shows that vertical foreclosure can have a dynamic rationale. By refusing to supply an efficient downstream rival, a vertically integrated incumbent sacrifices current profits but can exclude the rival by depriving it of the critical profits it

Authors: Joan Costa-Font, Sergi Jiménez-Martín and Analía Viola

Journal of Aging and Health, Vol. 33, No 7-8, 607-617 , August, 2021

The COVID-19 pandemic has exerted a disproportionate effect on older European populations living in nursing homes. This article discusses the 'fatal underfunding hypothesis', and reports an exploratory empirical analysis of the regional variation in nursing home fatalities during the first wave of the COVID-19 pandemic in Spain, one of the European countries with the highest number of nursing home fatalities. We draw on descriptive and multivariate regression analysis to examine the association between fatalities and measures of nursing home organisation, capacity and coordination plans alongside other characteristics. We document a correlation between regional nursing home fatalities (as a share of excess deaths) and a number of proxies for underfunding including nursing home size, occupancy rate and lower staff to a resident ratio (proxying understaffing). Our preliminary estimates reveal a 0.44 percentual point reduction in the share of nursing home fatalities for each additional staff per place in a nursing home consistent with a fatal underfunding hypothesis.