Firm size distribution: Testing the "independent submarkets model" in the Italian motor insurance industry
This paper tests the presence of multiple independent submarkets in the Italian motor insurance industry. Independence is motivated by administrative boundaries among provinces and by further locational reasons. We find that the independence effects are sufficient to induce a minimum degree of inequality in the size distribution of firms once submarkets are aggregated. These results are fully consistent with the predictions of Sutton (1998). We also show that the degree of skewness in the firms size distribution is related to characteristics such as the population living in an area, its density and the riskiness of a submarket.
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- Dahlby, Bev & West, Douglas S, 1986. "Price Dispersion in an Automobile Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 418-38, April.
- Asplund, Marcus, 1998. "On the size distributions of firms and markets," SSE/EFI Working Paper Series in Economics and Finance 288, Stockholm School of Economics.
- Carlson, John A & McAfee, R Preston, 1983. "Discrete Equilibrium Price Dispersion," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 480-93, June.
- Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2003.
"Firm Size and Market Power in Carbonated Soft Drinks,"
Review of Industrial Organization,
Springer, vol. 23(3_4), pages 283-299, December.
- Franco Mariuzzo & Patrick Walsh & Ciara Whelan, 2003. "Firm Size and Market Power in Carbonated Soft Drinks," Review of Industrial Organization, Springer, vol. 23(3), pages 283-299, December.
- Luigi Buzzacchi & Tommaso M. Valletti, 2004. "Firm Size Distribution in Small Samples," Bulletin of Economic Research, Wiley Blackwell, vol. 56(4), pages 301-309, October.
- Barron, John M. & Taylor, Beck A. & Umbeck, John R., 2004. "Number of sellers, average prices, and price dispersion," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1041-1066, November.
- John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
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