A feature of many insurance markets is that they combine vertical differentiation (all consumers prefer high to low-coverage policies) and adverse selection (high cost customers prefer high-coverage plans). Building on Novshek and Sonnenschein (1978) and Azevedo and Gottlieb (2017), this paper...

Abstract This paper extends the Becker (1968)-Ehrlich (1973) model of crime to allow for government transfers. Using the Shapiro and Stiglitz (1984) model, it is shown that one can view deterrence as a tax on (criminal) labor supply. That in turn allows an integration of a crime model with a...