Are Invisible Hands Good Hands in Health Care Markets? Extension

Wang Hao ()
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Wang Hao: National School of Development, Peking University, 423, CCER Peking University Haidian, Beijing 100871, China

The B.E. Journal of Theoretical Economics, 2017, vol. 17, issue 1, 8

Abstract: A previous study finds that increased competition in health care markets improves social welfare, although consumers use “too much” health care when they have health insurance. The analysis assumes that consumers have a constant Arrow-Pratt coefficient of absolute risk aversion. This note shows that this finding can be extended to the case where consumers are simply risk averse. Furthermore, if insurers offered insurance policies with slightly lower usage prices than the equilibrium level, social welfare would be improved.

Keywords: Bernoulli utility function; health insurance; social welfare (search for similar items in EconPapers)
JEL-codes: D60 D80 I10 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1515/bejte-2015-0050

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