Do Consumers Purchase Too Much Health Insurance? The Role of Market Power in Health-Care Markets
AbstractSeveral authors have suggested that consumers purchase too much health insurance in private markets. We readdress this issue within a model that combines excess health-care demand due to health insurance with market power due to monopolistic production of health-care services. We evaluate the market equilibrium in terms of consumer welfare and social welfare. The consumer welfare criterion suggests that in the market equilibrium consumers in fact purchase too much health insurance coverage. The social welfare criterion, in contrast, suggests that because profits of the health-care industry are properly accounted for, consumers should purchase more insurance coverage than they choose to do in the market equilibrium. Copyright 2007 Blackwell Publishing, Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 9 (2007)
Issue (Month): 3 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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- Nell, Martin & Richter, Andreas & Schiller, Jörg, 2009.
"When prices hardly matter: Incomplete insurance contracts and markets for repair goods,"
European Economic Review,
Elsevier, vol. 53(3), pages 343-354, April.
- Nell, Martin & Richter, Andreas & Schiller, Jörg, 2006. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Discussion Papers in Business Administration 1187, University of Munich, Munich School of Management.
- Martin Nell & Andreas Richter & Jörg Schiller, 2005. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Risk and Insurance 0501002, EconWPA.
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