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Are Invisible Hands Good Hands in Health Care Markets? Extension

Author

Listed:
  • Wang Hao

    (National School of Development, Peking University, 423, CCER Peking University Haidian, Beijing 100871, China)

Abstract

A previous study finds that increased competition in health care markets improves social welfare, although consumers use “too much” health care when they have health insurance. The analysis assumes that consumers have a constant Arrow-Pratt coefficient of absolute risk aversion. This note shows that this finding can be extended to the case where consumers are simply risk averse. Furthermore, if insurers offered insurance policies with slightly lower usage prices than the equilibrium level, social welfare would be improved.

Suggested Citation

  • Wang Hao, 2017. "Are Invisible Hands Good Hands in Health Care Markets? Extension," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(1), pages 1-8, January.
    • Handle: RePEc:bpj:bejtec:v:17:y:2017:i:1:p:8:n:3
    DOI: 10.1515/bejte-2015-0050
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    References listed on IDEAS

    as
    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    2. Berthold U. Wigger & Markus Anlauf, 2007. "Do Consumers Purchase Too Much Health Insurance? The Role of Market Power in Health‐Care Markets," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(3), pages 547-561, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bernoulli utility function; health insurance; social welfare;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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