Regulating Insurance Markets: Multiple Contracting and Adverse Selection

Andrea Attar (), Thomas Mariotti () and François Salanié
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Andrea Attar: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Thomas Mariotti: TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We study insurance markets in which privately informed consumers can purchase coverage from several firms whose pricing strategies are subject to an anti-dumping regulation. The resulting regulated game supports a single 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 can neither observe consumer types nor monitor their trades with firms. Accordingly, we argue that public intervention under multiple contracting and adverse selection should penalize firms that cross-subsidize between contracts, while leaving consumers free to choose their preferred amount of coverage.

Keywords: Insurance Markets; Regulation; Multiple Contracting; Adverse Selection.; Insurance Markets Regulation Multiple Contracting Adverse Selection. JEL Classification: D43 D82 D86; Adverse Selection. JEL Classification: D43; D82; D86 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-com, nep-mic and nep-reg
Note: View the original document on HAL open archive server: https://hal.science/hal-03796415v1
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Published in International Economic Review, 2022, 63 (3), pp.981-1020. ⟨10.1111/iere.12570⟩

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Related works:
Journal Article: REGULATING INSURANCE MARKETS: MULTIPLE CONTRACTING AND ADVERSE SELECTION (2022)
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2021)
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03796415

DOI: 10.1111/iere.12570

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