Reimbursing Preventive Care
In: The Geneva papers on risk and insurance theory, Band 29, Heft 2, S. 165-186
ISSN: 1573-6954
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In: The Geneva papers on risk and insurance theory, Band 29, Heft 2, S. 165-186
ISSN: 1573-6954
Only recently, competition authorities tend to agree on comparative advertising being helpful in promoting competition. They now encourage firms to use it. They reason that comparative advertising, if fair and not misleading, increases consumers' information about alternative brands. For this to work, comparative claims must be credible. Competition policy and legal practice are essential in making comparative advertising (directly and indirectly) informative. In this paper, first we provide a legal background of comparative advertising in in Europe and the US. Second, we provide an economic analysis of comparative advertising. Here, we discuss the ways comparative advertising can affect market outcomes. Third, we provide an analysis of some recent legal cases in Europe and the US. Overall, we focus on the scope of information transmission through comparative advertising and on the way antitrust laws affect it.
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Only recently, competition authorities tend to agree on comparative advertising being helpful in promoting competition. They now encourage firms to use it. They reason that comparative advertising, if fair and not misleading, increases consumers' information about alternative brands. For this to work, comparative claims must be credible. Competition policy and legal practice are essential in making comparative advertising (directly and indirectly) informative. In this paper, first we provide a legal background of comparative advertising in in Europe and the US. Second, we provide an economic analysis of comparative advertising. Here, we discuss the ways comparative advertising can affect market outcomes. Third, we provide an analysis of some recent legal cases in Europe and the US. Overall, we focus on the scope of information transmission through comparative advertising and on the way antitrust laws affect it.
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This paper investigates the topping-up scheme in health insurance when both public and private firms use linear contracts. First, the case with identical consumers is analyzed. The optimal public coverage is derived both when the firms play simultaneously and when they play sequentially. In the former case consumers are over-insured, whereas, in the latter case, the second-best allocation is obtained. Then, consumers' heterogeneity is introduced: consumers differ in their wage rate and labour supply is endogenous. It is assumed that public coverage is uniform and health expenditures are financed by linear taxation. Results show that, in the sequential game, the optimal public coverage is negative and consumers are under-insured.
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I compare in-kind reimbursement (which fixes treatment quantities) and reimbursement insurance (which fixes treatment prices) as demandside, cost-containment measures. In the model, illness has a negative impact on labor productivity and public insurance is financed through labor income taxation. Consumers are heterogeneous with respect to intensity of preferences for treatment which is their private information. The social planner may be constrained to adopt uniform (pooling) allocations or may be free to choose discriminating (self selecting) allocations in the reimbursement plan. Analyzing pooling allocations I show that reimbursement insurance dominates in-kind reimbursement from a social welfare point of view. While considering self-selecting allocations I show that the two reimbursement methods are equivalent.
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The paper focus on secondary prevention (diagnostic screening, medical examination, chech-up…) which refers to the early detection of disese. In particular secondary prevention in analyzed as an instrument of self-isurance: if illness occurs, the negative health shock decrease. Both the case in which secondary prevention and treatment are complementary goods, and that in which they are substitutes, are analyzed. Optimal reimbursement for prevention and treatment is derived when insurance uses a liner mechanism. Results show that, starting from a situation with no insurance, a linear contract always encourages treatment consumption whereas it may either encourage or discourage secondary prevention consumption. Prebention consumption is discouraged when the two goods are substitutes. In the former case, one of the two goods is taxed and the other is subsidized, while in the latter case the two goods are either both subsidized or taxed.
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I compare in-kind reimbursement and reimbursement insurance. I explicitly consider outpatient and inpatient care in a model where illness has a negative impact on labor productivity. Consumers are heterogeneous with respect to intensity of preferences for treatment which is their private information. Then the social planner has a choice of two kinds of reimbursement structure: pooling (uniform) and self-selecting allocations. Analyzing pooling allocations I show that reimbursement insurance weakly dominates in-kind reimbursement. While considering self-selecting allocations I show that the two reimbursement methods are, from a social welfare point of view, equivalent.
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In: Quaderni - Working Paper DSE N° 1182
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In: CEPR Discussion Paper No. DP16704
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Pharmaceutical innovations result from the successful achievement of basic research, produced by an upstream lab, and applied research, produced by a downstream lab. We focus on the negotiation process to finance basic research by setting public and private grants and to agree on the final price of a new drug. We show that exclusive funding of basic research is desirable. To increase consumers' surplus and reduce negotiated prices for new drugs, basic and applied research should be integrated if the lab producing applied research has a relatively large bargaining power. When instead the health authority has the larger bargaining power, integration with the producer of basic research increases negotiated prices for new drugs and should be avoided, unless the gain in bargaining power after the integration is extremely high. Abstract. Pharmaceutical innovations result from the successful achievement of basic research, produced by an upstream lab, and applied research, produced by a downstream lab. We focus on the negotiation process to finance basic research by setting public and private grants and to agree on the final price of a new drug. We show that exclusive funding of basic research is desirable. To increase consumers' surplus and reduce negotiated prices for new drugs, basic and applied research should be integrated if the lab producing applied research has a relatively large bargaining power. When instead the health authority has the larger bargaining power, integration with the producer of basic research increases negotiated prices for new drugs and should be avoided, unless the gain in bargaining power after the integration is extremely high.
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In: UBEconomics Working Papers E17/366
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Working paper
According to the labor donation theory, workers adhering to their firms' mission are willing to donate a portion of their paid labor. In this paper, we study how workers' fairness concerns limit the firm's ability to extract labor donation from its employees. We find that, in sectors where the firm's mission is important, optimal contracts are such that high-ability employees perceive their wage as less fair than low-ability employees and they must be rewarded with an "envy rent". The opposite is true in sectors where the firm's mission does not play a relevant role. We empirically test the predictions of the model using the German Socio-Economic Panel finding support for our theoretical results.
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We study optimal non-linear contracts offered by two firms competing for the exclusive services of workers, who are privately informed about their ability and motivation. Firms differ in their organizational form, and motivated workers are keen to be hired by the non-profit firm because they adhere to its mission. If the for-profit firm has a competitive advantage over the non-profit firm, the latter attracts fewer high-ability workers with respect to the former. Moreover, workers exert more effort at the for-profit than at the non-profit firm despite the latter distorts effort levels upwards. Finally, a wage penalty emerges for non-profit workers which is partly due to compensating effects (labor donations by motivated workers) and partly due to the negative selection of ability into the non-profit firm. The opposite results hold when it is the non-profit firm that has a competitive advantage.
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Both borrowers and lenders can be socially responsible (SR). Ethical banks commit to financing only ethical projects, which have social profitability but lower expected revenues than standard projects. Instead, no credible commitment exists for SR borrowers. The matching between SR borrowers and ethical banks reduces the frictions caused by moral hazard. However, when the type of the borrowers is not observable, then standard borrowers have incentives to invest in ethical projects pretending to be SR. We show that the separation of borrowers entails costs that are paid by SR entrepreneurs but are relatively low because standard lenders offer an outside option that relaxes the self-selection constraint of the borrowers. Technically, we solve a Contract Proposal Game where informed principals (borrowers) offer different menus of contracts to heterogeneous agents (banks). We show that market segmentation improves efficiency and solves the problem of multiplicity of equilibria in Contract Proposal Games.
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In: Quaderni - Working Paper DSE N° 953
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Working paper