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Title:Cream skimming, dregs skimming, and pooling: On the dynamics of competitive screening PDF Logo
Authors:Lund, Diderik
Nilssen, Tore
Issue Date:2000
Series/Report no.:Memorandum, Department of Economics, University of Oslo 2000,39
Abstract:We discuss the prevalence of pooling equilibria in a two-period model of an insurance market with asymmetric information. We solve the model numerically. In addition to reporting cases where a pooling equilibrium exists, we pay attention to why, in the case of non-existence of a pooling equilibrium, this is so. In addition to the phenomenon of cream skimming emphasized in earlier literature, we here point to the the importance of the opposite: dregs skimming, whereby high-risk consumers are profitably detracted from the candidate pooling contract.
JEL:D82
G22
L14
Document Type:Working Paper
Appears in Collections:Memorandum, Department of Economics, University of Oslo

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