Asymmetric Demand Response when Prices Increase and Decrease: The Case of Child Healthcare

Toshiaki Iizuka and Hitoshi Shigeoka

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: This study tests whether demand responds symmetrically to price increases and decreases—a seemingly obvious proposition under conventional demand theory that has not been rigorously tested. Exploiting rapid expansion in municipal subsidies for child healthcare in a difference-in-differences framework, we find evidence against it: when coinsurance, our price measure, increases from 0% to 30%, the demand response is more than twice that to a price decrease from 30% to 0%. This result indicates that, while economists and policymakers pay little attention, the price change direction matters, and that welfare analysis should incorporate this direction.

Keywords: Asymmetric demand Response; Patient Cost-Sharing; Child Healthcare; Conventional Demand Theory (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-com and nep-ias
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Asymmetric Demand Response When Prices Increase and Decrease: The Case of Child Health Care (2023)
Working Paper: Asymmetric Demand Response when Prices Increase and Decrease: The Case of Child Healthcare (2020)
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