Notice in Fig XXXXXXXXXXthat the cross-subsidy insurance lines B˜ h and B˜ intersect on the breakeven pooling contract line B¯. Why must this always be true whatever the amount of the tax on the...

Notice in Fig. 19.10 that the cross-subsidy insurance lines B˜ h and B˜ intersect on the breakeven pooling contract line B¯. Why must this always be true whatever the amount of the tax on the low-risk contract and whatever the proportion of low risks in the population?



May 26, 2022
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