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| Author: | Toivanen, Otto |
| Title: | Economies of scale and scope in the finnish non-life insurance industry |
| Journal: | Journal of Banking and Finance
1997 : JUN, VOL. 21:6, p. 759-779 |
| Index terms: | COST EFFECTIVENESS INSURANCE OLIGOPOLY PORTFOLIO MANAGEMENT FINLAND |
| Language: | eng |
| Abstract: | This paper examines economies of scale and scope in the Finnish non-life insurance industry. The basic assumption concerning (financial) services production is that the relevant unit of production is the branch. The production process is divided into cost and portofolio management functions. Companies expand their branch network to either gain market power or informational advantages. There are diseconomies of scale at company and economies of scale at branch level, and economies of scope in production. Large firms pay a substantial premium to gain market power via branch networks in the non-life insurance industry. The results of the study show that the retained premiums-curve of portofolio management is U-shaped and a positive function of the number of branches. |
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