Health Insurance and Consumer Welfare : The Case of Monopolistic Drug Markets
AbstractIndividual moral hazard engendered by health insurance and monopolistic production are both typical phenomena of drug markets. We develop a simple model containing these two elements and show that private agents tend to overinsure themselves against health respectively drug expenses if drugs can be produced at low marginal costs. If marginal costs are negligible, health insurance should be abandoned at all.
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Bibliographic InfoPaper provided by Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre in its series Discussion Papers with number 565.
Date of creation: 1999
Date of revision:
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
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- Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
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- Blomqvist, Ake, 1997. "Optimal non-linear health insurance," Journal of Health Economics, Elsevier, vol. 16(3), pages 303-321, June.
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