Quantity Competition in Spatial Markets with Incomplete Information
研究保险公司如何通过调整保额（数量竞争）而非价格来区分高风险和低风险客户，并推导出市场均衡存在的充分条件，对保险市场设计和竞争政策有参考价值。
In a seminal article Rothschild and Stiglitz [R-S, 1976] have developed the properties of markets for insurance when firms cannot distinguish high-risk from low-risk individuals; the R-S approach has been developed by Wilson [1977] and Riley [1979]. A problem in this literature is that competitive firms have an incentive to offer contracts that single out profitable low-risk individuals. When all firms behave in a similar manner, high-risk types have no alternative to the contract intended for the lowrisk class; expectations are disappointed, and competition fails to support market equilibrium. This paper demonstrates that insurance firms are able to use the quantity of insurance to compete for customers. By changing the level of indemnity while holding the premium rate constant (quantity competition), it is possible to induce customers to reveal their risk class.1 This paper develops a framework for the analysis of quantity competition, and it derives the sufficient condition for the existence of market equilibrium. In this paper, spatial monopolistic firms compete at the boundaries of their market areas for customers who are indifferent as to where (i.e., from whom) they make a purchase (see Greenhut [1970] and Capozza and van Order [1978]). Spatial relationships motivate the incomplete information assumption: highrisk types can conceal their identities (i.e., it is impossible to observe differences among risk classes) because of the spatial separation between firms and customers. The insurance industry provides an example of a service that is dependent on face-to-face contacts between sales agents and clients: for example, over 90 percent of life insurance is sold through agencies.2 A group of 85 life insurance companies, accounting for