084023 (E10) Fairly priced deposit insurance, incentive compatible regulations, and bank asset choices : Suk Heun Yoon, Mazumdar, The Geneva papers on risk and Insurance Theory, 21 13–141 (1996)
- Book ID
- 104299844
- Publisher
- Elsevier Science
- Year
- 1997
- Tongue
- English
- Weight
- 175 KB
- Volume
- 19
- Category
- Article
- ISSN
- 0167-6687
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✦ Synopsis
This article explains how lobbying pressure intensifies tax-transfer inefficiencies in disaster prevention and relief. The social-welfare tradeoff in the government's joint provision of safety regulation and disaster relief is distorted by disinformational lobbying activity by disaster-exposed households and by conflict between principles of horizontal and vertical equity. Horizontal equity presupposes that no group of taxpayers wants to transfer wealth ex ante to equally wealthy disaster-exposed parties. But vertical equity implies that, when disaster strikes, households that were previously able to hide the mitigability of their exposure to a ratable hazard can nevertheless extract sizable transfers from other taxpayers ex post.