Audit Competition in Insurance Oligopolies

Nicolas Boccard
Authors registered in the RePEc Author Service: Patrick Legros

No 3478, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We provide a simple framework for analyzing how competition affects the choice of audit structures in an oligopolistic insurance industry. When the degree of competition increases, fraud increases but the response of the industry in terms of investment in audit quality follows a U-shaped pattern. Following increases in competition, the investment in audit quality will decrease if the industry is initially in a low competition regime while it will increase when the industry is in a high competition regime. We use these results to show that firms will benefit from forming a joint audit agency only when the degree of competition is intermediate and that cooperation might improve total welfare; we also analyze the effects of contract innovation on the performance of the industry.

Keywords: Oligopoly; Insurance fraud; Audit (search for similar items in EconPapers)
JEL-codes: D43 D82 L20 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Audit Competition in Insurance Oligopolies (2017)
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