Insurance Market Games: Scale Effects and Public Policy
We propose a game-theoretic model to study various effects of scale in an insurance market. After reviewing a simple static model, we present a one-period game in which both the buyers and sellers of insurance make strategic bids, and show that, under reasonably broad conditions, market equilibrium exists. For a special case, we then consider how both the price and quantity of insurance, as well as other quantities of interest to public policy decision makers, are affected by the number of insurance firms, the number of customers, and the total amount of capital provided by investors.
|Date of creation:||Aug 1994|
|Date of revision:|
|Publication status:||Published in Zeitschrift fur Nationalokonomie (Journal of Economics) (1998), 67(2): 109-134|
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- Michael Powers & Martin Shubik & Shun Yao, 1998.
"Insurance market games: Scale effects and public policy,"
Journal of Economics,
Springer, vol. 67(2), pages 109-134, June.
- Michael R. Powers & Martin Shubik & Shuntian Yao, 1994. "Insurance Market Games: Scale Effects and Public Policy," Cowles Foundation Discussion Papers 1076, Cowles Foundation for Research in Economics, Yale University.
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- Dubey, Pradeep & Shubik, Martin, 1978. "A theory of money and financial institutions. 28. The non-cooperative equilibria of a closed trading economy with market supply and bidding strategies," Journal of Economic Theory, Elsevier, vol. 17(1), pages 1-20, February.
- Powers, Michael R., 1995. "A theory of risk, return and solvency," Insurance: Mathematics and Economics, Elsevier, vol. 17(2), pages 101-118, October.
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