Competition Policy in Selection Markets

CPI Antitrust Chronicle Submission, August 2014

9 Pages Posted: 23 Aug 2014

See all articles by Neale Mahoney

Neale Mahoney

University of Chicago Booth School of Business; National Bureau of Economic Research (NBER)

Andre Veiga

Imperial College London

E. Glen Weyl

Microsoft Research New York City; Princeton University - Julis Rabinowitz Center for Public Policy and Finance

Date Written: August 21, 2014

Abstract

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.

Keywords: competition policy, selection markets, cream-skimming, merger analysis, sub-prime lending, health insurance

JEL Classification: D40, D82, G20, I11, K21, L41

Suggested Citation

Mahoney, Neale and Veiga, Andre and Weyl, Eric Glen, Competition Policy in Selection Markets (August 21, 2014). CPI Antitrust Chronicle Submission, August 2014. Available at SSRN: https://ssrn.com/abstract=2484738 or http://dx.doi.org/10.2139/ssrn.2484738

Neale Mahoney

University of Chicago Booth School of Business ( email )

5807 South Woodlawn Ave
Chicago, IL 60637
United States
773.702.9278 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andre Veiga

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Eric Glen Weyl (Contact Author)

Microsoft Research New York City ( email )

641 Avenue of the Americas
7th Floor
New York, NY 10011
United States
8579984513 (Phone)

HOME PAGE: http://www.glenweyl.com

Princeton University - Julis Rabinowitz Center for Public Policy and Finance ( email )

Princeton University
Princeton, NJ 08544-1021
United States

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