On the Emergence of Private Insurance in Presence of Mutual Agreements

Bourlès, Renaud (2007): On the Emergence of Private Insurance in Presence of Mutual Agreements.

Abstract

The aim of this paper is to analyze the impact of the existence of mutual firms on the behavior of an insurance company and more precisely to study in which situations a private insurance firm may emerge in presence of an incumbent mutual firm. Our approach differs from the existing literature as we integrate the investment choices of the company and the fact that, because it commits on a fix contract, it can become insolvent. In such a situation we are able to characterize the unique optimal choices of an entrant company and the conditions favoring or preventing its appearance.

• Item Type: MPRA Paper
• Language: English
• Keywords: Insurance market, Mutual firms, Commitment, Insolvency
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance

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