Competition and efficiency in the Dutch life insurance industry
By J. Bikker, Michiel van Leuvensteijn. 2008
160 citations recorded by the source corpus.
The lack of available prices in the Dutch life insurance industry makes competition an elusive concept that defies direct observation. Therefore, this article investigates competition by analysing several factors which may affect the competitive nature of a market and various indirect measurement approaches. After discussing various supply and demand factors which may constitute a so-called tight oligopoly, we establish the existence of scale economies and the importance of cost X-inefficiency, since severe competition would force firms to exploit available scale economies and to reduce X-inefficiencies. Both scale economies and X-inefficiencies turn out to be substantial, although more or less comparable to those found for insurers in other countries and to other financial institutions. Further, we apply the Boone indicator, a novel approach to measuring the effects of competition. This indicator points to limited competition in comparison to other sectors in the Netherlands. Further investigations of submarkets should reveal where policy measures in order to promote competition might be appropriate. †The views expressed in this article are personal and do not necessarily reflect those of CPB or DNB
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/6aef38b1404b1caad0b87cacaab134ffbec3ed10
Citations in the corpus
- Impact of bank competition on the interest rate pass-through in the euro area (2013, unknown): “The main innovation of our article is that it applies a new measure of competition called the Boone indicator (see also Boone, 2001 , 2008 ; Bikker and van Leuvensteijn, 2008 ; van Leuvensteijn et al , 2011 ).”
- A new approach to measuring competition in the loan markets of the euro area (2011, unknown): “12 Savings banks have small market shares and mutually similar marginal costs, so that the overall Boone indicator is determined mainly by the few commercial banks with large market shares and varying marginal cost. 13 See for example Standard & Poor’s (S&P, 2004) and Moody’s Investors Service (2006”