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Mergers, coordinated effects and efficiency in the Portuguese non-life insurance industry

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  • Brito, Duarte
  • Pereira, Pedro
  • Ramalho, Joaquim J.S.

Abstract

We evaluate the impact on market power and efficiency of a series of mergers on three Portuguese non-life insurance markets. We specify and estimate, with a panel of firm-level data, a structural model which includes: preferences, technology, and a market equilibrium condition. Firms' demand curves are not very elastic. Firms' technologies exhibit scale and scope economies and high cost efficiency scores. We find that, for the period following the mergers, there is no evidence of: (i) an increase in market power through coordinated behavior, or (ii) changes in cost efficiency levels. In addition, social welfare increased.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 31 (2013)
Issue (Month): 5 ()
Pages: 554-568

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Handle: RePEc:eee:indorg:v:31:y:2013:i:5:p:554-568

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Mergers; Market power; Efficiency; Non-life insurance;

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References

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Cited by:
  1. Michel, Christian, 2013. "Identification and Estimation of Intra-Firm and Industry Competition via Ownership Change," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80488, Verein für Socialpolitik / German Economic Association.
  2. Christian, Michel, 2013. "Identification and Estimation of Intra-Firm and Industry Competition via Ownership Change," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 409, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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