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Insurance and Monopoly Power in a Mixed Private/Public Hospital System

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Author Info
DONALD J. WRIGHT

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Abstract

Consumers, when ill, often have the choice of being treated for free in a public hospital or at a positive price in a private hospital. To compensate for the positive price, private hospitals offer a higher quality treatment. Private hospitals and doctors also have a degree of monopoly power in their pricing. In this setting, it is shown that the introduction of an insurance premium subsidy does not affect the number of consumers treated in the private hospital, rather the private hospital and the doctor respond to the subsidy by increasing the prices they charge and the quality of the private hospital experience. Copyright © 2006 The Economic Society of Australia.

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Article provided by The Economic Society of Australia in its journal Economic Record.

Volume (Year): 82 (2006)
Issue (Month): 259 (December)
Pages: 460-468
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Handle: RePEc:bla:ecorec:v:82:y:2006:i:259:p:460-468

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  1. Alfons Palangkaraya & Jongsay Yong & Elizabeth Webster & Peter Dawkins, 2009. "The income distributive implications of recent private health insurance policy reforms in Australia," The European Journal of Health Economics, Springer, vol. 10(2), pages 135-148, May. [Downloadable!] (restricted)
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This page was last updated on 2009-11-28.

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