This paper studies the effects of redistributive taxation in credit markets with adverse selection and shows that there exists a range of taxes that creates Pareto improvement relative to the (zero-tax) market allocation by increasing aggregate investment. For sufficiently high taxes, an...

This paper studies general health insurance markets. It proposes an ex post risk adjustment scheme that discourages risk selection and promotes efficient competition. Under the proposed risk adjustment scheme, the regulator engages in transfers that are conditional on the ex post profits of...

I construct an efficient game of competition for insurance markets with adverse selection. In the game, each company offers two menus of contracts: a public menu and a private menu. The union of all the public menus needs to be offered by every active company in the market. A private menu...

I study the effect of interest rates on banks' lending standards. I find that low (high) interest rates discourage (encourage) screening but facilitate (hinder) effort provision. Less screening, as a result of low interest rates, increases the likelihood of a banking crisis. I further show that...

This paper reconsiders the general informed principal model with unilateral private information and common values. First, it identifies some fundamental properties of the Rothschild-Stiglitz-Wilson (RSW) allocation (i.e., the undominated for the principal allocation within the set of incentive...

This paper studies the effect of inter-entrepreneurial productivity variation on investment under asymmetric information and signalling in the credit market. When productivity is not sufficiently dispersed, safe-type entrepreneurs face borrowing constraints and might under- or over-invest...

This paper studies the effects of redistributive taxation in credit markets with adverse selection and shows that there exists a range of taxes that creates Pareto improvement relative to the (zero-tax) market allocation by increasing aggregate investment. For sufficiently high taxes, an...