EBK HEALTH ECONOMICS
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ISBN: 9781137029973
Author: TU
Publisher: YUZU
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Chapter 4, Problem 8E
To determine
Determine whether the given statement is true or false.
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One major premise of the Rothschild–Stiglitz model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the Rothschild–Stiglitz model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.
Indicate whether the statement is true or false, and justify your answer.The fact that older people spend more on health care is evidence against theGrossman model, which predicts that spending will decline as δ increases.
Indicate whether the statement is true or false, and justify your answer.Health status earlier in life is a good predictor of wealth later in life.
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