Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/74540 
Year of Publication: 
2012
Series/Report no.: 
Working Papers on Risk and Insurance No. 25 [rev.]
Publisher: 
Hamburg University, Institute for Risk and Insurance, Hamburg
Abstract: 
This paper examines the competition of nonprofit sickness funds in the market for supplementary health insurance. We investigate product quality strategies when quality is costly and the sickness funds are competing for customers. As long as the sickness funds choose the qualities for simultaneously, any equilibrium will be nondifferentiated. Only if total demand is increasing in quality, both sickness funds provide the maximum quality. For decreasing total demand the existence of an equilibrium depends on the consumers' sensitivity. If there is no equilibrium in the simultaneous competition, sequential quality competition leads to a differentiated equilibrium with a first mover advantage.
Subjects: 
supplementary health insurance
vertical differentiation
output maximization
JEL: 
I11
L22
L30
Document Type: 
Working Paper

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