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- Title
Information Spillovers, Margins, Scale and Scope: With an Application to Canadian Life Insurance.
- Authors
Bernstein, Jeffrey I.
- Abstract
A model of the production of life insurance services is developed. The focus is on price setting ability and the cost advantages from size and diversity. The model characterizes insurers decisions on the face value and number of policies and the number of insurance lines. The model is applied to Canadian life insurance firms. Unit revenue-cost margins average from 13 per cent to 40 per cent across lines of insurance. These margins emanate from information spillovers generated by marketing activities. Cost advantages due to size are small, but are substantial form diversity. Returns to scale average from 1.13 to 1.40, while returns to scope from offering multiple insurance lines average from 70 percent to 100 per cent.
- Subjects
CANADA; LIFE insurance; PRODUCTION (Economic theory); PRICES; INSURANCE companies; INSURANCE
- Publication
Scandinavian Journal of Economics, 1992, Vol 94, pS95
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440250