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Competition Policy in Selection Markets

BY | October 15, 2014

This article is part of a Chronicle. See more from this Chronicle Neale Mahoney, Andre Veiga, Glen Weyl, Oct 15, 2014 One of the oldest arguments against both competition and…

This article is part of a Chronicle. See more from this Chronicle

Neale Mahoney, Andre Veiga, Glen Weyl, Oct 15, 2014

One of the oldest arguments against both competition and the policies promoting it is the problem of cream-skimming. In selectionmarkets, like insurance and finance, where some customers are cheaper to serve than others, competitors have an incentive to poach the most lucrative customers from their rivals, the “cream.” As Rothschild & Stiglitz and de Meza & Webb fam

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