The Dynamics of Disease in a Regulated Vertically Differentiated Health System
Quaderni DSE Working Paper No. 737
21 Pages Posted: 12 Mar 2011
Date Written: March 3, 2011
We build up a differential game to investigate the interplay between the quality of health care and the presence of an evolving disease in a duopoly where patients are heterogeneous along the income dimension. We prove unicity, stability and perfection of the open-loop Nash solution. Moreover, we identify the admissible parameter region wherein price regulation achieves the twofold objectives of ensuring cares to all patients and eradicating the disease.
Keywords: health care markets, quality, dynamic games
JEL Classification: C73, H42, I11, I18, L13
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