IDEAS home Printed from https://ideas.repec.org/p/ihs/ihsesp/189.html
   My bibliography  Save this paper

The Austrian Insurance Industry: A Structure, Conduct and Performance Analysis

Author

Listed:
  • Jedlicka, Lorenz

    (Department of Economics, BWZ, University of Vienna)

  • Jumah, Adusei

    (Department of Economics, BWZ, University of Vienna and Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

Abstract

There exist a vast number of studies on the banking industry. However, the insurance industry remains relatively unexplored. Increasingly, Austrian insurance institutions are becoming important as financial intermediaries in the domestic market, and – based on proximity advantage – also in the Central and Eastern European markets. This paper applies the structure, conduct and performance (SCP) approach to a sample of 52 Austrian insurance firms. The main finding is that the standard SCP hypothesis of highly concentrated markets, which create incentives to engage in collusive behaviour and which in turn leads to higher industry profit rates, cannot be supported by the Austrian insurance industry leads to higher industry profit rates, cannot be supported by the Austrian insurance industry.

Suggested Citation

  • Jedlicka, Lorenz & Jumah, Adusei, 2006. "The Austrian Insurance Industry: A Structure, Conduct and Performance Analysis," Economics Series 189, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:189
    as

    Download full text from publisher

    File URL: https://irihs.ihs.ac.at/id/eprint/1707
    File Function: First version, 2006
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rabah Amir, "undated". "Market Structure, Scale Economies and Industry Performance," CIE Discussion Papers 2000-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    2. R. E. Caves & M. E. Porter, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(2), pages 241-261.
    3. Demsetz, Harold, 1982. "Barriers to Entry," American Economic Review, American Economic Association, vol. 72(1), pages 47-57, March.
    4. William J. Baumol & Robert D. Willig, 1981. "Fixed Costs, Sunk Costs, Entry Barriers, and Sustainability of Monopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 405-431.
    5. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    6. Fama, Eugene F., 1980. "Banking in the theory of finance," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 39-57, January.
    7. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    8. Miller, Richard A, 1969. "Market Structure and Industrial Performance: Relation of Profit Rates to Concentration, Advertising Intensity, and Diversity," Journal of Industrial Economics, Wiley Blackwell, vol. 17(2), pages 104-118, April.
    9. Asch, Peter & Seneca, Joseph J, 1975. "Characteristics of Collusive Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 23(3), pages 223-237, March.
    10. Lloyd-Williams, D. M. & Molyneux, Phil & Thornton, John, 1994. "Market structure and performance in Spanish banking," Journal of Banking & Finance, Elsevier, vol. 18(3), pages 433-443, May.
    11. Curry, B & George, K D, 1983. "Industrial Concentration: A Survey," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 203-255, March.
    12. Henry G. Grabowksi & Dennis C. Mueller, 1978. "Industrial Research and Development, Intangible Capital Stocks, and Firm Profit Rates," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 328-343, Autumn.
    13. Neuberger, Doris, 1997. "Structure, Conduct and Performance in Banking Markets," Thuenen-Series of Applied Economic Theory 12, University of Rostock, Institute of Economics.
    14. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, vol. 73(1), pages 82-97, March.
    15. Paul L. Joskow, 1973. "Cartels, Competition and Regulation in the Property-Liability Insurance Industry," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 375-427, Autumn.
    16. Thomas R. Stauffer, 1971. "The Measurement of Corporate Rates of Return: A Generalized Formulation," Bell Journal of Economics, The RAND Corporation, vol. 2(2), pages 434-469, Autumn.
    17. Tong Hun Lee, 1966. "Substitutability Of Non‐Bank Intermediary Liabilities For Money: The Empirical Evidence," Journal of Finance, American Finance Association, vol. 21(3), pages 441-457, September.
    18. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    19. McFarland, Henry B, 1988. "Evaluating q as an Alternative to the Rate of Return in Measuring Profitability," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 614-622, November.
    20. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    21. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    22. Kwoka, John E, Jr, 1979. "The Effect of Market Share Distribution on Industry Performance," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 101-109, February.
    23. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gentiana Sharku & Sali Shehu, 2016. "Concentration of Albanian Insurance Market," Ekonomika a Management, Prague University of Economics and Business, vol. 2016(3).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manthos D. Delis & Sotirios Kokas & Steven Ongena, 2016. "Foreign Ownership and Market Power in Banking: Evidence from a World Sample," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(2-3), pages 449-483, March.
    2. Perloff, Jeffrey M, 1991. "Econometric analysis of imperfect competition and implications for trade research," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt46w1j22d, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Karel Cool & Ingemar Dierickx, 1993. "Abstract," Strategic Management Journal, Wiley Blackwell, vol. 14(1), pages 47-59, January.
    4. Shaffer, Sherrill, 2004. "Patterns of competition in banking," Journal of Economics and Business, Elsevier, vol. 56(4), pages 287-313.
    5. Bernardo Batiz-Lazo & Douglas Wood, 2003. "Corporate strategy for Mexican banks and market contestability," Industrial Organization 0301014, University Library of Munich, Germany.
    6. Doan, Tinh & Stevens, Philip, 2012. "Evolution of competition in Vietnam industries over the recent economic transition," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-24.
    7. Vivek Sharma, 2011. "Stock returns and product market competition: beyond industry concentration," Review of Quantitative Finance and Accounting, Springer, vol. 37(3), pages 283-299, October.
    8. Kotsios, Panayotis, 2010. "Regulatory Barriers to Entry in Industrial Sectors," MPRA Paper 27976, University Library of Munich, Germany.
    9. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    10. Lukáš Čechura & Tinoush Jamali Jaghdani, 2021. "Market Imperfections within the European Wheat Value Chain: The Case of France and the United Kingdom," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    11. Boone, J., 2004. "Balance of Power," Other publications TiSEM d3f8cd4b-eaf0-4c1c-aed4-5, Tilburg University, School of Economics and Management.
    12. Luís Cabral, 2018. "We’re Number 1: Price Wars for Market Share Leadership," Management Science, INFORMS, vol. 64(5), pages 2013-2030, May.
    13. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    14. van Driel, Hugo, 2000. "Collusion in transport: group effects in a historical perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 385-404, April.
    15. Micha Gisser & Raymond Sauer, 2000. "The Aggregate Relation between Profits and Concentration is Consistent with Cournot Behavior," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 229-246, May.
    16. Boone, Jan, 2004. "Balance of Power," CEPR Discussion Papers 4733, C.E.P.R. Discussion Papers.
    17. Hernán Vallejo, 2007. "A generalized index of market power," Revista de Economía del Rosario, Universidad del Rosario, December.
    18. Haucap, Justus, 2017. "The rule of law and the emergence of market exchange: A new institutional economic perspective," DICE Discussion Papers 276, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    19. Manthos D. Delis & K. Christos Staikouras & Panagiotis T. Varlagas, 2008. "On the Measurement of Market Power in the Banking Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(7‐8), pages 1023-1047, September.
    20. Herbert Hovenkamp, 2011. "Harm to Competition Under the 2010 Horizontal Merger Guidelines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(1), pages 3-18, August.

    More about this item

    Keywords

    Insurance industry; Market structure; Conduct and performance; Industrial organisation;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ihs:ihsesp:189. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Doris Szoncsitz (email available below). General contact details of provider: https://edirc.repec.org/data/deihsat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.