Raising Capital in an Insurance Oligopoly Market
Julien Hardelin and
Sabine Lemoyne de Forges
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Sabine Lemoyne de Forges: Département d’Économie, École Polytechnique, 91128 Palaiseau Cedex, France and AgroParisTech ENGREF, 19 avenue du Maine, 75732 Paris Cedex 15, France
The Geneva Risk and Insurance Review, 2012, vol. 37, issue 1, 83-108
Abstract:
We consider an oligopoly market where firms offer insurance coverage against a risk characterised by aggregate uncertainty. Firms behave as if they were risk averse for a standard reason of costly external finance. The model consists in a two-stage game where firms choose their internal capital level at stage one and compete on price at stage two. We characterise the subgame perfect Nash equilibria of this game and focus attention on the strategic impact of insurers capital choice. We discuss the model with regard to the insurance industry specificities and regulation.
Date: 2012
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Working Paper: Raising capital in an insurance oligopoly market (2009)
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