| In this dissertation I identify the source(s) of price setting power in the German statutory health insurance system. To accomplish this I construct a self compiled firm level data set with detailed information on membership, price and non-price attributes. For each of the three potential sources of price setting power, search costs, switching costs and product heterogeneity, I develop an empirical model that is designed to evaluate each potential source individually.;I then estimate these models separately using ordinary least squares, fixed effects and dynamic panel data methods while controlling for endogeneity, heteroskedasticity and autocorrelation. The individual results suggest that both switching and search costs are potential sources of price setting powering this market, while non-price attributes are found to have no significant impact on sickness fund size.;Finally a joint estimation of the models confirms that product heterogeneity can be rejected as potential source. The results also strongly support the hypothesis that switching costs are the major source without ruling out that search costs play a secondary role. |
