Information Spillovers, Margins, Scale and Scope: With an Application to Canadian Life Insurance
A model of the production of life insurance services is developed. The focus is on price setting ability and the cost advantages from size and diversity. The model characterizes insurers decisions on the face value and number of policies and the number of insurance lines. The model is applied to Canadian life insurance firms. Unit revenue-cost margins average from 13 percent to 40 percent across lines of insurance. These margins emanate from information spillovers generated by marketing activities. Cost advantages due to size are small, but are substantial from diversity. Returns to scale average from 1.13 to 1.40, while returns to scope from offering multiple insurance lines average from 70 percent to 100 percent. Copyright 1992 by The editors of the Scandinavian Journal of Economics.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 94 (1992)
Issue (Month): 0 (Supplement)
|Contact details of provider:|| Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0347-0520|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dionne, Georges, 1984.
"Search and Insurance,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(2), pages 357-367, June.
- Dionne, G., 1980. "Search and Insurance," Cahiers de recherche 8101, Universite de Montreal, Departement de sciences economiques.
- Crocker, Keith J & Snow, Arthur, 1986. "The Efficiency Effects of Categorical Discrimination in the Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 321-344, April.
- Cooper, Russell & Hayes, Beth, 1987. "Multi-period insurance contracts," International Journal of Industrial Organization, Elsevier, vol. 5(2), pages 211-231.
- Diewert, W.E., 1993. "Duality approaches to microeconomic theory," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 12, pages 535-599 Elsevier.
- Randall Geehan, 1977. "Returns to Scale in the Life Insurance Industry," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 497-514, Autumn.
- Spence, Michael, 1978. "Product differentiation and performance in insurance markets," Journal of Public Economics, Elsevier, vol. 10(3), pages 427-447, December.
- Mayers, David & Smith, Clifford W, Jr, 1990. "On the Corporate Demand for Insurance: Evidence from the Reinsurance Market," The Journal of Business, University of Chicago Press, vol. 63(1), pages 19-40, January. Full references (including those not matched with items on IDEAS)