In their article, the authors present the differences between the model of perfect market and an imperfect market for healthcare services. They explain the notion of demand for health and the factors that shape it. The justify functioning of the third party in healthcare with occurrence of external benefits. They characterise a specific type of the agency relation issuing from the information asymmetry, which has developed in healthcare in contacts between the patient and the doctor. The authors also described deficiencies resulting from functioning of the system of insurance in healthcare: negative selection and temptation of abuse. They also explained why it is deemed that some medical services ought to be subsidised to a greater extent than other ones based on such notions as dualism of preferences and paternalistic altruism.
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