@TechReport{iza:izadps:dp4125,
            	author={Siemens, Ferdinand von and Kosfeld, Michael},
            	title={Negative Externalities and Equilibrium Existence in Competitive Markets with Adverse Selection},
            	year={2009},
	month={Apr},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={4125},
            	url={https://www.iza.org/index.php/publications/dp4125},
	abstract={Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents − an agent's utility upon accepting a contract depends on the average type attracted by the respective principal − can solve the equilibrium existence problem, even when the size of the externalities is arbitrarily small. Our result highlights the degree of control a principal has over the attractiveness of his contracts as an important feature for equilibrium existence, thereby offering a new perspective on existing theories of competition in markets with adverse selection.},
	keywords={asymmetric information;competition;adverse selection;externality},
            }