Economies of scale in the Swiss nursing home industry

Abstract

The paper examines costs in the Swiss nursing home industry, an issue of concern to Swiss policy makers because of the explosion of elderly care costs and the ageing of the population. The paper considers estimation of a translog cost function employing panel data for a sample of 36 nonprofit nursing homes operating in Ticino, a canton of Switzerland, over the period 1993-1995. Using a set of dummy variables quality differences are considered. The results of this analysis indicate the existence of economies of scale for most output levels.