Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds
AbstractThis paper examines the competition of nonprofit sickness funds in the market for supplementary health insurance. We investigate product quality strategies when quality is costly and the sickness funds are competing for customers. As long as the sickness funds choose the qualities for simultaneously, any equilibrium will be nondifferentiated. Only if total demand is increasing in quality, both sickness funds provide the maximum quality. For decreasing total demand the existence of an equilibrium depends on the consumers' sensitivity. If there is no equilibrium in the simultaneous competition, sequential quality competition leads to a differentiated equilibrium with a first mover advantage. --
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Bibliographic InfoPaper provided by University of Hamburg, Institute for Risk and Insurance in its series Working Papers on Risk and Insurance with number 25 [rev.].
Date of creation: 2012
Date of revision:
supplementary health insurance; vertical differentiation; output maximization;
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-16 (All new papers)
- NEP-COM-2013-06-16 (Industrial Competition)
- NEP-HEA-2013-06-16 (Health Economics)
- NEP-IAS-2013-06-16 (Insurance Economics)
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