Economic Efficiency and Mixed Public/Private Insurance
AbstractIn this paper we discuss the efficiency properties of insurance markets where supplementary private insurance is allowed to exist together with a compulsory government insurance plan. Our main conclusion, which is contrary to both those of Besley (1989) and Selden (1993), is that in a simple model focussing on the moral hazard problem alone, a mixed system will generally be strictly less efficient than a purely private (competitive) system. We also show that there is a flaw in Selden's (1993) main proposition, which at least in part invalidates his result on the welfare properties of systems of mixed government/private insurance.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 110.
Length: 16 pages
Date of creation: Mar 1996
Date of revision:
Publication status: Published in Journal of Public Economics, 1997, pages 505-516.
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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
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More information through EDIRC
Health insurance; moral hazard; optimal insurance; government insurance;
Other versions of this item:
- Blomqvist, A. & Johansson, P-O., 1997. "Economic efficiency and mixed public/private insurance," Journal of Public Economics, Elsevier, vol. 66(3), pages 505-516, December.
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-11-05 (All new papers)
- NEP-EFF-1998-11-05 (Efficiency & Productivity)
- NEP-IAS-1998-11-05 (Insurance Economics)
- NEP-MIC-1998-11-05 (Microeconomics)
- NEP-PBE-1998-11-05 (Public Economics)
- NEP-POL-1998-11-05 (Positive Political Economics)
- NEP-PUB-1998-11-05 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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