Health insurance and imperfect competition in the health care market.
We show that when health care providers have market power and engage in Cournot competition, a competitive upstream health insurance market results in over-insurance and over-priced health care. Even though consumers and firms anticipate the price interactions between these two markets - the price set in one market affects the demand expressed in the other - Pareto improvements are possible. The results suggest a beneficial role for Government intervention, either in the insurance or the health care market.
Vaithianathan
Rhema
R
University of Auckland, Department of Economics, PBN 92019, Auckland, New Zealand. r.vaithianathan@auckland.ac.nz
D004465:Economic Competition / Q000706:statistics & numerical data; D019981:Health Care Sector; D007348:Insurance, Health; D017059:Models, Econometric; D009520:New Zealand