Dynamic price competition in auto insurance brokerage

• 成果类型: Article
• 署名作者: Braido, Luis H. B.; Ledo, Bruno C. A.
• 署名单位: Getulio Vargas Foundation; Universidade de Sao Paulo
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12256
• 发表日期: 2018
• 页码: 914-935
• 关键词: consumer switching costs; empirical-analysis; search costs; MARKETS; dispersion; industry; duopoly; MODEL

摘要

We analyze Brazilian data on auto insurance and document that (a) about 20% of policies are sold without brokerage commission; (b) over 40% are sold at the highest fee allowed; and (c) the remaining contracts are associated with a spread-out distribution of fees. Static models cannot rationalize these findings. We develop a dynamic model of price competition with search and switching costs that reproduces them. We use the equilibrium structure to estimate the model parameters and infer the brokers' expected earnings, the frequency that insurees switch brokers, and the counterfactual effects of a price ceiling policy.