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Freedom of Services and Competition in Insurance Markets: A Note

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  • Pedro Pita Barros

    (Faculdade de Economia, Universidade Nova de Lisboa, Travessa Estevao Pinto, P-1000, Lisboa, Portugal)

Abstract

We study entry in markets which are characterized by adverse selection. The analysis is motivated by the introduction of freedom of services in insurance markets at the European Community (EC) level. We assume that entrants in each domestic market (large multinational firms) are more efficient due to scale/scope economies but suffer an informational disadvantage. Incumbent firms, on the other hand, have perfect information about risks but incur higher production costs. We show there may exist competitive equilibria in which both types of firms coexist. The idea is that each technology trades-off production costs with information costs. The Geneva Papers on Risk and Insurance Theory (1993) 18, 93–101. doi:10.1007/BF01125820

Suggested Citation

  • Pedro Pita Barros, 1993. "Freedom of Services and Competition in Insurance Markets: A Note," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 18(1), pages 93-101, June.
    • Handle: RePEc:pal:genrir:v:18:y:1993:i:1:p:93-101
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    Cited by:

    1. Henri Loubergé, 1998. "Risk and Insurance Economics 25 Years After," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 23(4), pages 540-567, October.
    2. repec:clg:wpaper:2007-18 is not listed on IDEAS

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