Competition Policy in Selection Markets
University of Chicago Booth School of Business; National Bureau of Economic Research (NBER)
University of Oxford - Nuffield College
E. Glen Weyl
Microsoft Research New England; University of Chicago
August 21, 2014
CPI Antitrust Chronicle Submission, August 2014
Selection markets, like insurance and finance, where the value of customers depends on their identity, create fundamental challenges for competition policy. Competition is often harmful in these markets either by creating socially excessive supply or leading to degradation of product quality. Standard indicators used to gauge policies, such as upward pricing pressure, are also often mis-calibrated in these settings. We summarize for a policy audience and draw competition policy conclusions from two recent papers on the interaction between competition policy and selection, using calibrations to sub-prime auto lending and health insurance.
Number of Pages in PDF File: 9
Keywords: competition policy, selection markets, cream-skimming, merger analysis, sub-prime lending, health insurance
JEL Classification: D40, D82, G20, I11, K21, L41
Date posted: August 23, 2014
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