To Regulate or Not to Regulate: Using Revenue Maximization Tools to Maximize Consumer Utility

Meryem Essaidi, Kira Goldner, S. Matthew Weinberg

Abstract: We study a theoretical model inspired by regulated health insurance markets. The market regulator can choose to do nothing, running a Free Market, or can exercise her regulatory power by limiting the entry of providers (decreasing consumer welfare by limiting options, but also decreasing revenue via enhanced competition). We investigate whether limiting entry increases or decreases the utility (welfare minus revenue) of the consumers who purchase from the providers, specifically in settings where the outside option of “purchasing nothing” is prohibitively undesirable.

External IDs:dblp:conf/sagt/EssaidiGW24