000			01192nam a22001457a 4500
999			_c517968 _d517968
008			210806b ||||| |||| 00| 0 eng d
100			_aLemus, J., temnyalov, E. and Turner, J.L. _928300
245			_aLiability insurance: Equilibrium contracts under monopoly and competition
260			_aAmerican Economic Journal: Microeconomics
300			_a13(1), Feb, 2021: p.83-115
520			_aIn liability lawsuits (e.g., patent infringement), a plaintiff demands compensation from a defendant, and the parties often negotiate a settlement to avoid a costly trial. Liability insurance creates bargaining leverage for the defendant in this settlement negotiation. We study the characteristics of monopoly and equilibrium contracts in settings where this leverage effect is a substantial source of value for insurance. Our results show that under adverse selection, a monopolist offers at most two contracts, which underinsure low-risk types and may inefficiently induce high-risk types to litigate. In a competitive market, only a pooling equilibrium with underinsurance may exist. – Reproduced
773			_aAmerican Economic Journal: Microeconomics
906			_aINSURANCE
942			_cAR