Sales Force and Competition in Financial Product Markets: The Case Of Mexico’s Social Security Privatization
Ali Hortacsu and
No 18881, NBER Working Papers from National Bureau of Economic Research, Inc
This paper examines how sales force impact competition and equilibrium prices in the context of a privatized pension market. We use detailed administrative data on fund manager choices and worker characteristics at the inception of Mexico’s privatized social security system, where fund managers had to set prices (management fees) at the national level, but could select sales force levels by local geographic areas. We develop and estimate a model of fund manager choice where sales force can increase or decrease customer price sensitivity. We find exposure to sales force lowered price sensitivity, leading to inelastic demand and high equilibrium fees. We simulate oft-proposed policy solutions: a supply-side policy with a competitive government player and a demand-side policy which increases price elasticity. We find that demand-side policies are necessary to foster competition in social safety net markets with large segments of inelastic consumers.
JEL-codes: D14 D18 G11 L20 L21 L51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dev and nep-mkt
Note: AG IO PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Published as Econometrica: Nov 2017, Volume 85, Issue 6 Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization DOI: 10.3982/ECTA12302 p. 1723-1761 Justine Hastings, Ali Hortaçsu, Chad Syverson
Downloads: (external link)
Journal Article: Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18881
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().