Regulating Insurance Markets: Multiple Contracting and Adverse Selection

Attar, Andrea, Mariotti, Thomas and Salanié, François (2019) Regulating Insurance Markets: Multiple Contracting and Adverse Selection. TSE Working Paper, n. 19-1033, Toulouse

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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.

Item Type: Monograph (Working Paper)
Language: English
Date: August 2019
Place of Publication: Toulouse
Uncontrolled Keywords: Insurance Markets, Regulation, Multiple Contracting, Adverse Selection.
JEL codes: D43 - Oligopoly and Other Forms of Market Imperfection
D82 - Asymmetric and Private Information
D86 - Economics of Contract - Theory
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: UniversitéToulouse 1 Capitole
Site: UT1
Date Deposited: 30 Aug 2019 07:40
Last Modified: 30 Aug 2019 07:40
OAI ID: oai:tse-fr.eu:123328
URI: http://publications.ut-capitole.fr/id/eprint/32706

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