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Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds

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  • Ellert, Alexander
  • Urmann, Oliver

Abstract

This 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.

Suggested Citation

  • Ellert, Alexander & Urmann, Oliver, 2012. "Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds," Working Papers on Risk and Insurance 25 [rev.], University of Hamburg, Institute for Risk and Insurance.
  • Handle: RePEc:zbw:hzvwps:25r
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    References listed on IDEAS

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    More about this item

    Keywords

    supplementary health insurance; vertical differentiation; output maximization;

    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

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