Imperfect Competition in Markets with Adverse or Advantageous Selection
建立空间模型分析不完全竞争如何影响逆向或正向选择造成的效率损失，发现降低竞争会加剧逆向选择的低效但可能缓解正向选择的低效，且不完全竞争无法完全纠正低效，而完全竞争下可通过矫正税完美纠正。
Abstract This paper proposes a spatial model of imperfect competition in markets with adverse or advantageous selection. The model shows that a reduction in competition exacerbates the inefficiency created by adverse selection but can ameliorate the inefficiency created by advantageous selection. However, reduced competition never corrects the inefficiency perfectly because it introduces an allocative inefficiency. By contrast, the inefficiency can be corrected perfectly through a corrective tax when there is perfect competition. Our results have implications for competition policy in credit and insurance markets, as they caution against viewing imperfect competition as a solution to the inefficiencies created by selection.