IDEAS home Printed from https://ideas.repec.org/a/caa/jnlage/v70y2024i10id358-2023-agricecon.html
   My bibliography  Save this article

Strategic interactions and market equilibrium in China's agricultural catastrophic insurance

Author

Listed:
  • Xiaolan Wang

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

  • Xinli Wang

    (College of Economics and Management, Heilongjiang Bayi Agricultural University, Daqing, P. R. China)

  • Jundi Liu

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

  • Jing Wang

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

Abstract

In China's agricultural catastrophe insurance market, issues of non-equilibrium are prominent. To understand the causes of non-equilibrium in agricultural catastrophe insurance and to develop prevention strategies, this study employs an Evolutionary Game Model, incorporating disaster and insurance data for three types of cereal crops in Henan Province to analyse the Evolutionarily Stable Strategies in the agricultural catastrophe insurance market. The research also considers government policies and disaster reinsurance as implicit participants in the model. The findings reveal significant differences in the impact of non-equilibrium in the agricultural catastrophe insurance market and the choice of game strategies, dependent on the scale of farm operations, the type of crops cultivated, and regional variations. Significantly, decision-making evolutionary paths vary between small and medium-scale farmers, with rice growers emphasising income insurance more. In regions prone to frequent catastrophes, the insurance rates for agricultural catastrophe insurance exhibit greater flexibility. By scientifically delineating agricultural catastrophe risk zones, appropriately expanding the scale of cultivation, reducing insurance rates, and adjusting agricultural catastrophe insurance products, a balanced development in the agricultural catastrophe insurance market can be promoted.

Suggested Citation

  • Xiaolan Wang & Xinli Wang & Jundi Liu & Jing Wang, 2024. "Strategic interactions and market equilibrium in China's agricultural catastrophic insurance," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 70(10), pages 495-512.
    • Handle: RePEc:caa:jnlage:v:70:y:2024:i:10:id:358-2023-agricecon
    DOI: 10.17221/358/2023-AGRICECON
    as

    Download full text from publisher

    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/358/2023-AGRICECON.html
    Download Restriction: free of charge
    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/358/2023-AGRICECON.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.17221/358/2023-AGRICECON?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
    2. Radoslav Raykov, 2015. "Catastrophe insurance equilibrium with correlated claims," Theory and Decision, Springer, vol. 78(1), pages 89-115, January.
    3. Friedman, Daniel, 1991. "Evolutionary Games in Economics," Econometrica, Econometric Society, vol. 59(3), pages 637-666, May.
    4. Yu, Jisang & Vandeveer, Monte & Volesky, Jerry D. & Harmoney, Keith, 2019. "Estimating the Basis Risk of Rainfall Index Insurance for Pasture, Rangeland, and Forage," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 44(1), January.
    5. Yuqiang Gao & Yongkang Shu & Hongjie Cao & Shuting Zhou & Shaobin Shi, 2021. "Fiscal Policy Dilemma in Resolving Agricultural Risks: Evidence from China’s Agricultural Insurance Subsidy Pilot," IJERPH, MDPI, vol. 18(14), pages 1-11, July.
    6. Lichtenberg, Erik & Iglesias, Eva, 2022. "Index insurance and basis risk: A reconsideration," Journal of Development Economics, Elsevier, vol. 158(C).
    7. Wonder Agbenyo & Yuansheng Jiang & Xinxin Jia & Jingyi Wang & Gideon Ntim-Amo & Rahman Dunya & Anthony Siaw & Isaac Asare & Martinson Ankrah Twumasi, 2022. "Does the Adoption of Climate-Smart Agricultural Practices Impact Farmers’ Income? Evidence from Ghana," IJERPH, MDPI, vol. 19(7), pages 1-25, March.
    8. Burns, Christopher B. & Prager, Daniel L., 2018. "Does Crop Insurance Influence Commercial Crop Farm Decisions to Expand? An Analysis Using Panel Data from the Census of Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(1), January.
    9. Brian C. Briggeman & Maria M. Akers, 2010. "The credit advantage of farm and rural small business ownership," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(3), pages 353-364, November.
    10. Berber Kramer & Peter Hazell & Harold Alderman & Francisco Ceballos & Neha Kumar & Anne G. Timu, 2022. "Is Agricultural Insurance Fulfilling Its Promise for the Developing World? A Review of Recent Evidence," Annual Review of Resource Economics, Annual Reviews, vol. 14(1), pages 291-311, October.
    11. Luona Song & Yiqing Luo & Zixi Chang & Chunhua Jin & Merveille Nicolas, 2022. "Blockchain Adoption in Agricultural Supply Chain for Better Sustainability: A Game Theory Perspective," Sustainability, MDPI, vol. 14(3), pages 1-21, January.
    12. Pu Liao & Xianhua Zhou & Qingquan Fan, 2020. "Does agricultural insurance help farmers escape the poverty trap? Research based on multiple equilibrium models," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 203-223, January.
    13. Hong Fu & Yuehua Zhang & Yinuo An & Li Zhou & Yanling Peng & Rong Kong & Calum G. Turvey, 2022. "Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 98-121, March.
    14. Karl Borch, 1968. "General Equilibrium in the Economics of Uncertainty," International Economic Association Series, in: Karl Borch & Jan Mossin (ed.), Risk and Uncertainty, chapter 0, pages 247-264, Palgrave Macmillan.
    15. John Duncan & Robert J. Myers, 2000. "Crop Insurance under Catastrophic Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 842-855.
    16. Mario J. Miranda & Joseph W. Glauber, 1997. "Systemic Risk, Reinsurance, and the Failure of Crop Insurance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 206-215.
    17. Bryan Schurle, 1996. "The Impact of Size on Yield Variability and Crop Insurance Premiums," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 18(3), pages 415-422.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiaolan Wang & Xinli Wang & Jundi Liu & Jing Wang, . "Strategic interactions and market equilibrium in China's agricultural catastrophic insurance," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 0.
    2. Zhiwei Shen & Martin Odening, 2013. "Coping with systemic risk in index-based crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 1-13, January.
    3. Wu, Yang-Che, 2020. "Equilibrium in natural catastrophe insurance market under disaster-resistant technologies, financial innovations and government interventions," Insurance: Mathematics and Economics, Elsevier, vol. 95(C), pages 116-128.
    4. Myers, Robert J. & Liu, Yanyan & Hanson, Steven D., 2005. "How Should We Value Agricultural Insurance Contracts," 2005 Annual meeting, July 24-27, Providence, RI 19561, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Zant, Wouter, 2008. "Hot Stuff: Index Insurance for Indian Smallholder Pepper Growers," World Development, Elsevier, vol. 36(9), pages 1585-1606, September.
    6. Hongyun Han & Ye Jiang, 2019. "Systemic Risks of Climate Events and Households’ Participation in Mariculture Mutual Insurance: A Case Study of Shrimp Producers in Zhejiang Province," Sustainability, MDPI, vol. 11(4), pages 1-24, February.
    7. Nieuwoudt, W. Lieb, 2000. "An economic evaluation of a crop insurance programme for small-scale commercial farmers in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 39(3), pages 1-23, September.
    8. Woodard, Joshua D. & Garcia, Philip, 2008. "Weather Derivatives, Spatial Aggregation, and Systemic Risk: Implications for Reinsurance Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(1), pages 1-18, April.
    9. Tiwari, Sweta & Coble, Keith & Harri, Ardian & Barnett, Barry, 2017. "Hedging the Price Risk of Crop Revenue Insurance Through the Options Market," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 253081, Southern Agricultural Economics Association.
    10. Martínez-Salgueiro, Andrea & Tarrazón-Rodón, María-Antonia, 2020. "Is diversification effective in reducing the systemic risk implied by a market for weather index-based insurance in Spain?," MPRA Paper 119924, University Library of Munich, Germany, revised 19 May 2021.
    11. Tan, Yiheng & Huang, Xiying & Li, Wei, 2023. "Does blockchain-based traceability system guarantee information authenticity? An evolutionary game approach," International Journal of Production Economics, Elsevier, vol. 264(C).
    12. Fujikawa, Takemi, 2009. "The hot stove effect in repeated-play decision making under ambiguity," MPRA Paper 17647, University Library of Munich, Germany.
    13. Hansen, Lars Peter, 2013. "Uncertainty Outside and Inside Economic Models," Nobel Prize in Economics documents 2013-7, Nobel Prize Committee.
    14. Qianru Chen & Hualin Xie & Qunli Zhai, 2022. "Management Policy of Farmers’ Cultivated Land Abandonment Behavior Based on Evolutionary Game and Simulation Analysis," Land, MDPI, vol. 11(3), pages 1-23, February.
    15. Lichi Zhang & Yanyan Jiang & Junmin Wu, 2022. "Evolutionary Game Analysis of Government and Residents’ Participation in Waste Separation Based on Cumulative Prospect Theory," IJERPH, MDPI, vol. 19(21), pages 1-16, November.
    16. Peter John Robinson & W. J. Wouter Botzen & Fujin Zhou, 2021. "An experimental study of charity hazard: The effect of risky and ambiguous government compensation on flood insurance demand," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 275-318, December.
    17. Gajdos, Thibault & Maurin, Eric, 2004. "Unequal uncertainties and uncertain inequalities: an axiomatic approach," Journal of Economic Theory, Elsevier, vol. 116(1), pages 93-118, May.
    18. Luca De Gennaro Aquino & Sascha Desmettre & Yevhen Havrylenko & Mogens Steffensen, 2024. "Equilibrium control theory for Kihlstrom-Mirman preferences in continuous time," Papers 2407.16525, arXiv.org, revised Oct 2024.
    19. Karantounias, Anastasios G., 2023. "Doubts about the model and optimal policy," Journal of Economic Theory, Elsevier, vol. 210(C).
    20. Mich Tvede & Hervé Crès, 2001. "Voting in Assemblies of shareholders and Incomplete Markets," SciencePo Working papers hal-01064884, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:caa:jnlage:v:70:y:2024:i:10:id:358-2023-agricecon. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivo Andrle (email available below). General contact details of provider: https://www.cazv.cz/en/home/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.