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Health insurance and consumer welfare : The case of monopolistic drug markets

Author

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  • Anlauf, Markus
  • Wigger, Berthold U.

Abstract

Individual 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.

Suggested Citation

  • Anlauf, Markus & Wigger, Berthold U., 1999. "Health insurance and consumer welfare : The case of monopolistic drug markets," Discussion Papers 565, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    • Handle: RePEc:mnh:vpaper:1045
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    File URL: https://madoc.bib.uni-mannheim.de/1045/1/565.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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