The coexistence of distribution systems under price search: Theory and some evidence from insurance

Lisa L. Posey, Sharon Tennyson

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

This paper analyzes a pure price search model of an insurance market in which two different search technologies are simultaneously available: sequential search and nonsequential search. Sequential search characterizes firms that sell directly to consumers and nonsequential search characterizes firms who use independent agents that sell the products of a number of different firms. The separation of firms and consumers into the two market sectors is endogenously determined, and the conditions for equilibrium coexistence are derived. The characteristics of price distributions in the two sectors are then compared in a coexistence equilibrium. Price distributions observed in automobile insurance markets are found to be consistent with the predictions of the theoretical model.

Original languageEnglish (US)
Pages (from-to)95-115
Number of pages21
JournalJournal of Economic Behavior and Organization
Volume35
Issue number1
DOIs
StatePublished - Mar 30 1998

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Fingerprint Dive into the research topics of 'The coexistence of distribution systems under price search: Theory and some evidence from insurance'. Together they form a unique fingerprint.

Cite this