Is Zero a Special Price? Evidence from Child Healthcare

Toshiaki Iizuka and Hitoshi Shigeoka

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: Do consumers react differently to zero prices? We test the presence of a zero-price effect in child healthcare and find that a zero price is indeed special and it boosts demand discontinuously. A zero price affects resource allocations by encouraging healthier children to use more services and exacerbates behavioral hazard by increasing inappropriate use of antibiotics. A copayment, as small as 2USD per visit, alleviates these problems without increasing financial and health risks. However, a zero price may be used to boost demand for highly cost-effective treatments. Strategically choosing zero and non-zero prices is a key to improving welfare.

Keywords: Zero-price Effects; Patient Cost-Sharing; Children; Healthcare Utilization; Price Elasticity; Moral Hazard (search for similar items in EconPapers)
JEL-codes: I11 I13 I18 J13 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-hea and nep-ias
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sfu.ca/repec-econ/sfu/sfudps/dp21-06.pdf (application/pdf)

Related works:
Journal Article: Is Zero a Special Price? Evidence from Child Health Care (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sfu:sfudps:dp21-06

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, Simon Fraser University Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by Working Paper Coordinator ().