Multiple Contracting in Insurance Markets

Andrea Attar, Thomas Mariotti and François Salanié

No 839, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: We study a nonexclusive insurance market with adverse selection in which insurers compete through simple contract offers. Multiple contracting endogenously emerges in equilibrium. Different layers of coverage are priced fairly according to the types of insurees who purchase them, giving rise to cross-subsidies between types. Riskier insurees demand greater total coverage at an increasing unit price, but the contracts offered by insurers feature quantity discounts in equilibrium. Our policy implications emphasize the need to regulate the supply side of nonexclusive insurance markets, leaving insurees free to choose their optimal level of coverage.

Keywords: Insurance Markets; Multiple Contracting; Adverse Selection (search for similar items in EconPapers)
JEL-codes: D43 D82 D86 (search for similar items in EconPapers)
Date: 2014-10, Revised 2016-09
New Economics Papers: this item is included in nep-com, nep-cta, nep-ias and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Multiple Contracting in Insurance Markets (2016)
Working Paper: Multiple Contracting in Insurance Markets (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ide:wpaper:28619

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