PRODUCT DIFFERENTIATION AND PERFORMANCE IN INSURANCE MARKETS (original) (raw)

This research examines the impacts of product differentiation in insurance markets, particularly in the presence of adverse selection. It highlights how differences in expected costs and consumer preferences can lead to market failures, pushing low-risk individuals to under-consume while high-risk individuals take advantage of lower-cost policies. The study suggests that without proper regulatory frameworks, the excessive product differentiation may serve to exacerbate these issues, resulting in reduced market efficiency.