ABSTRACT
This chapter aims to highlight the main economic issues concerned with healthcare delivery. The reasons why healthcare is delivered and financed in specific ways is examined by discussing the consequences of market failure in healthcare. A range of different methods of healthcare delivery is suggested in an attempt to address the problems caused by market failure. The chapter considers how the real world differs from the ideal economic model and the insights that are obtained from such an approach. The nature of healthcare delivery is complex and understanding it is crucial if healthcare systems are to be organised and financed in ways that meet society's objectives. Economic theory states that the ideal way to deliver any goods or services is through a perfectly competitive market. However, most of the assumptions of the perfectly competitive model do not apply in healthcare.
