Health insurance and consumer welfare: The case of monopolistic drug markets

Markus Anlauf and Berthold Wigger ()

No 565, Discussion Papers from Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre

Abstract: Individual moral hazard engendered by health insurance and monopolistic production are both typical phenomena of drug markets. We develop a simple model containing these two elements and show that private agents tend to overinsure themselves against health respectively drug expenses if drugs can be produced at low marginal costs. If marginal costs are negligible, health insurance should be abandoned at all.

JEL-codes: D42 H51 I11 (search for similar items in EconPapers)
Date: 1999
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