Moral Hazard, Market Power, and Second Best Health Insurance

Arbeitspapier

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 evaluate the market equilibrium on the basis of consumer and social welfare. The consumer welfare criterion suggests that in the market equilibrium individuals purchase too much insurance against the risk of drug expenses. In contrast, the social welfare criterion suggests that individuals should purchase more insurance coverage than they choose to do in the market equilibrium.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CSLE Discussion Paper ; No. 2002-06

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Monopoly ; Analysis of Health Care Markets ; National Government Expenditures and Health
• Subject: Drugs ; Insurance ; Monopoly ; Welfare ; Krankenversicherung ; Versicherungsökonomik ; Arzneimittelmarkt ; Monopol ; Moral Hazard ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wigger, Berthold U. ; Anlauf, Markus
• Event: Veröffentlichung
• (who): Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)
• (where): Saarbrücken
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/23120
• Last update: 10.03.2025, 11:42 AM CET