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Regulating Insurance Markets: Multiple Contracting and Adverse Selection

Andrea Attar, Thomas Mariotti and François Salanié

No 19-1033, TSE Working Papers from Toulouse School of Economics (TSE)

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. (search for similar items in EconPapers)
JEL-codes: D43 D82 D86 (search for similar items in EconPapers)
Date: 2019-08, Revised 2021-09
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 (1)

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Related works:
Journal Article: REGULATING INSURANCE MARKETS: MULTIPLE CONTRACTING AND ADVERSE SELECTION (2022) Downloads
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2022) Downloads
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2021) Downloads
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