Insurance Market Games: Scale Effects and Public Policy
We propose a game-theoretic model to study various eﬀects of scale in an insurance market. After reviewing a simple static model, we present a one-period game in which both the buyers and sellers of insurance make strategic bids, and show that, under reasonably broad conditions, market equilibrium exists. For a special case, we then consider how both the price and quantity of insurance, as well as other quantities of interest to public policy decision makers, are aﬀected by the number of insurance ﬁrms, the number of customers, and the total amount of capital provided by investors.
Powers, Michael R.; Shubik, Martin; and Yao, Shuntian, "Insurance Market Games: Scale Effects and Public Policy" (1994). Cowles Foundation Discussion Papers. 1319.