Insurance Markets When Firms Are Asymmetrically Informed: A Note

Jason David Strauss and Aidan Hollis

No 2007-18, Working Papers from Department of Economics, University of Calgary

Abstract: We examine welfare effects of the entry of a single well-informed insurance firm into a competitive insurance market. We show that the effect depends on the structure of the market. If competitive insurers rely on the standard self-selection mechanism of a menu of contracts, then the entry of a single well-informed firm which can discriminate costlessly between consumer risk types will increase welfare. In contrast, if consumers do not know their own risk type, then the introduction of a well-informed insurer may reduce welfare.

JEL-codes: G22 L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ias and nep-mic
Date: 2007-11-30, Revised 2007-11-30
View list of references View citations in EconPapers

Downloads: (external link)
http://econ.ucalgary.ca/sites/econ.ucalgary.ca/fil ... rically_Informed.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:clg:wpaper:2007-18

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Calgary
Contact information at EDIRC.
Series data maintained by May Ives ().