Journal
JOURNAL OF HEALTH ECONOMICS
Volume 25, Issue 6, Pages 1193-1202Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jhealeco.2006.03.003
Keywords
health insurance; health care markets; health care finance
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We show that when health care providers have market power and engage in Cournot competition, a competitive upstream health insurance market results in over-insurance and over-priced health care. Even though consumers and firms anticipate the price interactions between these two markets - the price set in one market affects the demand expressed in the other - Pareto improvements are possible. The results suggest a beneficial role for Government intervention, either in the insurance or the health care market. (c) 2006 Elsevier B.V. All rights reserved.
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