Gagnepain, Philippe and Ivaldi, Marc (2016) An Evaluation of the Degree of Competition in the French Life Insurance Industry. TSE Working Paper, n. 16-697, Toulouse

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Abstract

This article focuses on the life insurance industry in France and attempts to shed light on whether the insurers behave in a competitive fashion, or whether, on the contrary, they take coordinated decisions. We propose several empirical tests, which entail the estimation of the Boone indicator, a tool which explores the relationship between firms’ relative costs and profits, the evaluation of the switching costs beard by consumers when they decide to change insurer, and the construction of a structural model, which is based on an oligopolistic framework where insurers propose differentiated products. Our results suggest unambiguously that firms do follow a competitive behavior.