Arbeitspapier

Moral Hazard, Market Power, and Second Best Health Insurance

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.

Language
Englisch

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

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

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

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Wigger, Berthold U.
  • Anlauf, Markus
  • Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)

Time of origin

  • 2002

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