"Income Insurance with Uncertain Output"
©
International Economic Review,
August
1989
Volume: 30
|
Issue: 3
|
Pages: 561-69
Publication type: Journal article
Research Archive Topic: Business Economics and Public Policy, Corporate Finance, World Business
Abstract
This paper examines the properties of a market solution to the output uncertainty problem faced by unincorporated primary producers. An insurance contract is formulated and shown to provide income insurance to producers without exposing insurers to moral hazard. The equilibrium relative to this contract is shown to be equivalent to that effected by a stock market available to all producers.
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