Procurement with Specialized Firms

This paper analyzes optimal procurement mechanisms in a setting where the procurement agency has incomplete information concerning the firms’ cost functions and cares about quality as well as price. Low type firms are cheaper than high type firms in providing low quality but more expensive when providing high quality. Hence, each type is specialized in a certain quality level. We show that this specialization leads to a bunching of types on profits, i.e. a range of firms with different cost functions receives zero profits and therefore no informational rents. If first best welfare is monotone in the efficiency parameter, the optimal mechanism can be implemented by a simple auction. If first best welfare is U-shaped in type, the optimal mechanism is not efficient in the sense that types providing a lower second best welfare win against types providing a higher second best welfare.procurement;specialization;deregulation

Health Insurance without Single Crossing: Why Healthy People have High Coverage

Standard insurance models predict that people with high (health) risks have high insurance coverage. It is empirically documented that people with high income have lower health risks and are better insured. We show that income differences between risk types lead to a violation of single crossing in the standard insurance model. If insurers have some market power, this can explain the empirically observed outcome. This observation has also policy implications: While risk adjustment is traditionally viewed as an intervention which increases efficiency and raises the utility of low health agents, we show that with a violation of single crossing a trade off between efficiency and solidarity emerges.Health insurance;single crossing;risk adjustment

Health Insurance Competition: The Effect of Group Contracts

In countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. We find that groups that are located close to an insurers’ home turf pay a higher premium than other groups. This finding is not consistent with the bargaining argument in the literature as it implies that concentrated groups close to an insurer’s home turf should get (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.health insurance;health-plan choice;managed competition

Personality Characteristics and Labour Market Entry an exploration

In an explorative study, the value of four personality constructs in predicting success in the labour market entry has been analysed with a sample of graduates in economics from Maastricht University. The research question is: do personality characteristics predict labour market entry success and how much weight do these ‘soft’ factors have compared to the traditional ‘hard’ human capital factors like study results? Two out of the four constructs, i.e. (internal) Locus of control and Type A behaviour appear to have a positive effect on labour market success. The effects are independent of the effects of study results and other traditional human capital variables. Locus of control affects getting a job soon after graduation and having tenure, whereas Type A behaviour affects having tenure and wages. Study results merely affect job quality indicators. For obtaining an academic job, the human capital factors have a positive effect while personality has no effect at all. The findings underline the relevance of further labour market research with respect to the importance and role of the so called ‘soft’ factors like personality characteristics. At the same time, the role of ‘hard’ human capital factors is not to be neglected. Both types of factors seem to have their own and independent effects. Future research directions are given and implications of the study are discussed.labour market entry;

Thermal near infrared monitoring system for electron beam melting with emissivity tracking

This paper presents the design of a high speed, high resolution silicon based thermal imaging instrument and its application to thermally image the temperature distributions of an electron beam melting additive manufacturing system. Typically, thermal images are produced at mid or long wavelengths of infrared radiation. Using the shorter wavelengths that silicon focal plane arrays are sensitive to allows the use of standard windows in the optical path. It also affords fewer modifications to the machine and enables us to make use of mature silicon camera technology. With this new instrument, in situ thermal imaging of the entire build area has been made possible at high speed, allowing defect detection and melt pool tracking. Melt pool tracking was used to implement an emissivity correction algorithm, which produced more accurate temperatures of the melted areas of the layer