PUBH 3130 Lecture Notes - Lecture 15: Competitive Equilibrium, Moral Hazard, Price Discrimination
Document Summary
Ex post corrections through transfers to achieve the optimal distribution of satisfactions: introduction, major competitive preconditions. Risk & uncertainty are significant elements in market for medical care. Non-existence of markets to handle risk reduce utility for both sellers & buyers, reducing desire to render or consume services with risky consequences. Failure to produce commodities to handle risk is a failure to reach a pareto-optimal state with existing resources & technology. If the market fails to achieve an optimal state, non-market social institutions will arise in an attempt to bridge the shortcoming. The services provide satisfaction utility only in the event of illness. The demand is associated with assault on personal integrity. Risk of death or risk of impairment of full functioning. Risk of loss or reduction in earning ability. Illness is a costly risk in itself, in that it cannot be avoided with sufficient income: the medical care market: what"s so special about it, expected behavior of the physician.
