Imperfect Competition in Selection Markets
研究了市场力量和逆向选择共存时政策可能失效的问题，通过健康保险和次贷汽车贷款模型发现，风险调整可能减少覆盖和社会剩余，而竞争过度可能导致信贷过剩。
Policies to correct market power and selection can be misguided when these forces coexist. We build a model of symmetric imperfect competition in selection markets that parameterizes the degree of market power and selection. We use graphical price-theoretic reasoning to characterize the interaction between these forces. Using a calibrated model of health insurance, we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus. Conversely, in a calibrated model of subprime auto lending, realistic levels of competition can generate an oversupply of credit, implying that greater market power is desirable.