Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds

Alexander Ellert and Oliver Urmann

No 25 [rev.], Working Papers on Risk and Insurance from University of Hamburg, Institute for Risk and Insurance

Abstract: This paper examines the competition of nonprofit sickness funds in the market for supplementary health insurance. We investigate product quality strategies when quality is costly and the sickness funds are competing for customers. As long as the sickness funds choose the qualities for simultaneously, any equilibrium will be nondifferentiated. Only if total demand is increasing in quality, both sickness funds provide the maximum quality. For decreasing total demand the existence of an equilibrium depends on the consumers' sensitivity. If there is no equilibrium in the simultaneous competition, sequential quality competition leads to a differentiated equilibrium with a first mover advantage.

Keywords: supplementary health insurance; vertical differentiation; output maximization (search for similar items in EconPapers)
JEL-codes: I11 L22 L30 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-com, nep-hea and nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hzvwps:25r

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