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Insurers in the voluntary home insurance market in Country A provide very little flood insurance at very high premiums. The government of Country A creates
Insurers in the voluntary home insurance market in Country A provide very little flood insurance at very high premiums. The government of Country A creates "New Plan", a government insurance program. New plan insures people's homes against floods at relatively low premiums. New Plan loses money on its insurance activity. The government of Country A makes insurers in the voluntary insurance market pay money to cover the losses of New Plan. Is there a cross-subsidy here? Explain your
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