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When prices hardly matter: Incomplete insurance contracts and markets for repair goods

Author

Listed:
  • Martin Nell

    (University of Hamburg)

  • Andreas Richter

    (Illinois State University)

  • Jörg Schiller

    (WHU – Otto Beisheim Graduate School of Management)

Abstract

This paper looks at markets characterized by the fact that the demand side is insured. In these markets a consumer purchases a good to compensate consequences of unfavorable events, such as an accident or an illness. Insurance policies in most lines of insurance base indemnity on the insured’s actual expenses, i.e., the insured would be partially or completely reimbursed when purchasing certain goods. In this setting we discuss the interaction between insurance and repair markets by focusing, on the one hand, upon the development of prices and the market structure in markets with insured customers, and, on the other hand, the resulting backlash on optimal insurance contracting.

Suggested Citation

  • Martin Nell & Andreas Richter & Jörg Schiller, 2005. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Risk and Insurance 0501002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpri:0501002
    Note: Type of Document - pdf; pages: 29
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    References listed on IDEAS

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    Cited by:

    1. Gilad Sorek & Randolph T. Beard, 2016. "Regulating from the Demand Side: Public Health Insurance with Monopolistically Competitive Providers and Optional Spot Sales," Auburn Economics Working Paper Series auwp2016-06, Department of Economics, Auburn University.
    2. Andreas Richter & Jörg Schiller & Harris Schlesinger, 2014. "Behavioral insurance: Theory and experiments," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 85-96, April.
    3. Boyer, M. Martin & Schiller, Jörg, 2003. "Merging automobile regulatory bodies: The case of Atlantic Canada," Working Papers on Risk and Insurance 11, University of Hamburg, Institute for Risk and Insurance.
    4. M. Martin Boyer & Jörg Schiller, 2003. "Merging Automobile Insurance Regulatory Bodies: The Case of Atlantic Canada," CIRANO Working Papers 2003s-70, CIRANO.
    5. Gilad Sorek, 2015. "Health Insurance and Competition in Health Care Markets," Auburn Economics Working Paper Series auwp2015-03, Department of Economics, Auburn University.
    6. Urmann, Oliver, 2012. "Insurance in vertically differentiated repair markets," Economics Letters, Elsevier, vol. 116(1), pages 121-123.

    More about this item

    Keywords

    Incomplete Contracts; Insurance; Repair Markets;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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