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Complementarity and Substituability in Multiple-Risk Insurance Markets

Koehl, Pierre-François; Villeneuve, Bertrand (2001), Complementarity and Substituability in Multiple-Risk Insurance Markets, International economic review, 42, 1, p. 245-266. http://dx.doi.org/10.1111/1468-2354.00109

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Type
Article accepté pour publication ou publié
Date
2001
Journal name
International economic review
Volume
42
Number
1
Publisher
Wiley
Pages
245-266
Publication identifier
Metadata
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Author(s)
Koehl, Pierre-François
Villeneuve, Bertrand cc
Abstract (EN)
We study imperfect competition between insurers in a multiple-risk environment. In the absence of asymmetric information, equilibria are efficient, and we determine the degrees of specialization under which the specialized insurers are able or unable to capture the surplus. We show in contrast that under adverse selection, specialization systematically prevents second-best efficiency. Concluding on the role of our notions of strategic complementarity/substituability on the tradeoff between efficiency and fairness of the allocation, we give indications on the desirable structure of the insurance industry.
Subjects / Keywords
Risk; Insurance; Information; Equilibria; Adverse selection; Asymmetric information
JEL
D82 - Asymmetric and Private Information; Mechanism Design
D81 - Criteria for Decision-Making under Risk and Uncertainty
G22 - Insurance; Insurance Companies; Actuarial Studies