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| Author: | Gal-Or, E. |
| Title: | Exclusionary equilibria in health-care markets |
| Journal: | Journal of Economics & Management Strategy
1997 : SPRING, VOL. 6:1, p. 5-43 |
| Index terms: | INSURANCE COMPANIES HEALTH SERVICE MARKETS CUSTOMERS |
| Language: | eng |
| Abstract: | This study demonstrates that when providers of health insurance are perceived to be differentiated by consumers, circumstances could arise under which they find it advantageous to restrict the set of health-care providers that they approve to their customers. Payers may choose to contract with a select subset in order to secure more favorable contract terms, even if all health-care providers are equally qualified and efficient. In a concentrated health-care market that consists of two health insurance companies and two health-care providers, both payers could choose to contract with only one of the hospitals. Such an exclusionary outcome is the unique equilibrium of game, when consumers' valuation of an extended choice of providers is small in comparison with the extent of differentiation existing between the payers. |
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