Complementarity and substituability in multiple-risk insurance markets

We study imperfect competition between insurers in a multiple-risk environm ent. In the absence of asymmetric information. equilibria are efficient, an d we determine the degrees of specialization under which the specialized in surers are able or unable to capture the surplus. We show in contrast that under adverse selection, specialization systematically prevents second-best efficiency. Concluding on the role of our notions of strategic complementa rity/substituability on the tradeoff between efficiency and fairness of the allocation, we give indications on the desirable structure of the insuranc e industry.