This paper tests the presence of multiple independent submarkets in the Italian motor insurance industry. We find that independence effects are sufficient to induce a minimum degree of inequality in the size distribution of firms once submarkets are aggregated. These results are consistent with the predictions of Sutton [Sutton, J., 1998. Technology and market structure. MIT Press, Cambridge, MA.]. At the submarket level, some degree of inequality can be explained by a model of equilibrium price dispersion based on costly consumer search. Our findings show that Sutton’s limiting approach and one based on a game theoretical analysis of an industry are good complements when the industry is made of several independent submarkets.
|Titolo:||Firm size distribution: Testing the independent submarkets model in the Italian motor insurance industry|
|Data di pubblicazione:||2006|
|Appare nelle tipologie:||1.1 Articolo in rivista|