 Monopolistic Competition and Costs in the Health Care SectorNo 17/2009, IWH Discussion Papers from Halle Institute for Economic Research (IWH) Abstract: Competition among health insurers is widely considered to be a means of enhancing efficiency and containing costs in the health care system. In this paper, it is argued that this could be unsuccessful since health care providers hold a strong position on the market for health care services. Physicians exert a type of monopolistic power which can be described by Chamberlin's model of monopolistic competition. If many health insurers compete with one another, they cannot counterbalance the strong bargaining position of the physicians. Thus, health care expenditure is higher, financing either extra profits for physicians or a higher number of them. In addition, health insurers do not have an incentive to contract selectively with health care providers as long as there are no price differences between physicians. A monopolistic health insurer is able to counterbalance the strong position of physicians and to achieve lower costs. Keywords: health care system; monopolistic competition; health insurance; costs; Gesundheitswesen; monopolistische Konkurrenz; Krankenversicherung; Kosten (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:iwh-17-09 Access Statistics for this paper More papers in IWH Discussion Papers from Halle Institute for Economic Research (IWH) Contact information at EDIRC. |
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