Abstract
Generally, the relationship between cost and effectiveness is not proportional: While effectiveness increases with increase in cost, the growth rate gradually diminishes. This relationship is known in economics as the law of diminishing marginal utility. In a two-dimensional graph, if we represent effectiveness on the horizontal axis and cost on the vertical axis as in Fig. 7.1, the cost-effectiveness function is expressed as convex and downward, monotonically increasing from the lower left hand to the upper right hand of the first quadrant.
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References
Kamae I (2014) A Japanese-style approach to value-based pricing: scientific basis and theoretical potential. In: Culyer AJ, Kobelt G (eds) Portrait of a health economist: Essays by Colleagues and Friends of Bengt Jonsson. Swedish Institute for Health Economics, Sweden, pp 73–80
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Kamae, I. (2019). Advanced Research Topics. In: Health Technology Assessment in Japan. Adis, Singapore. https://doi.org/10.1007/978-981-13-5793-0_7
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DOI: https://doi.org/10.1007/978-981-13-5793-0_7
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