This paper studies an insurance market on which privately informed consumers can simultaneously trade with several firms operating under a regulation that prohibits cross-subsidies between contracts. The regulated game supports a single equilibrium allocation in which each layer of coverage is fairly priced given the consumer types who purchase it. This competitive allocation cannot be Pareto-improved by a social planner who observes neither consumers’ types nor their trades with firms. Public intervention under multiple contracting and adverse selection should thus arguably target firms’ pricing strategies, leaving consumers free to choose their preferred amount of coverage.

Attar, A., Mariotti, T., Salanie, F. (2022). Regulating insurance markets: multiple contracting and adverse selection. INTERNATIONAL ECONOMIC REVIEW, 63(3), 981-1020 [10.1111/iere.12570].

Regulating insurance markets: multiple contracting and adverse selection

Attar, AK;
2022-01-01

Abstract

This paper studies an insurance market on which privately informed consumers can simultaneously trade with several firms operating under a regulation that prohibits cross-subsidies between contracts. The regulated game supports a single equilibrium allocation in which each layer of coverage is fairly priced given the consumer types who purchase it. This competitive allocation cannot be Pareto-improved by a social planner who observes neither consumers’ types nor their trades with firms. Public intervention under multiple contracting and adverse selection should thus arguably target firms’ pricing strategies, leaving consumers free to choose their preferred amount of coverage.
2022
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
Settore ECON-01/A - Economia politica
English
Attar, A., Mariotti, T., Salanie, F. (2022). Regulating insurance markets: multiple contracting and adverse selection. INTERNATIONAL ECONOMIC REVIEW, 63(3), 981-1020 [10.1111/iere.12570].
Attar, A; Mariotti, T; Salanie, F
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/314144
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