Optimal Subsidy Support for the Provision of Elderly Care Services in China Based on the Evolutionary Game Analysis

Abstract

Public–private partnership is a type of cooperation that has been widely employed to alleviate contradictions between supply and demand in the elderly care industry in China. Based on evolutionary game theory, this paper mainly analyzes the effects of static subsidy and dynamic subsidy to private sectors and consumers on the evolution of the decision process for private investors, consumers, and government in the three-dimension system. The simulation results show that without active supervision, a higher subsidy to private sectors will not promote the provision of high-quality services when the cost saving is large. Furthermore, there exists a threshold value of the difference between the two types of subsidies such that elderly people will be encouraged to choose institutional care if the value exceeds the threshold. We also find that dynamic subsidy policy works more efficiently in promoting the provision of home-based care services.