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Assessing Competition in the Bulgarian Insurance Industry: A Panzar-Rosse Approach

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  • Aleksandar B. Todorov

    (Department of Economics, University of Economics - Varna)

Abstract

The study assesses the competitive behavior in the Bulgarian general insurance industry by applying an empirical methodology developed by Panzar & Rosse (1987). Based on company data from insurers' balance sheets and profit and loss accounts for the period between 2005 and 2014 a reduced-form revenue equation is estimated. The information about the insurers' competitive behavior is provided by the sum of the estimated factor price elasticities, which constitute the so called H-statistic. The fixed effects panel estimation suggests that the hypotheses of monopoly or collusive behavior cannot be rejected. These findings suggest that the Bulgarian insurance market is far from being perfectly competitive and may require further actions to promote its competitive development.

Suggested Citation

  • Aleksandar B. Todorov, 2016. "Assessing Competition in the Bulgarian Insurance Industry: A Panzar-Rosse Approach," Bulgarian Economic Papers bep-2016-04, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Mar 2016.
    • Handle: RePEc:sko:wpaper:bep-2016-04
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    References listed on IDEAS

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    1. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
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    5. Croissant, Yves & Millo, Giovanni, 2008. "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i02).
    6. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-456, June.
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    Cited by:

    1. Qiao-Ming Lim & Hui-Shan Lee & Wai-Mun Har, 2021. "Efficiency, productivity and competitiveness of the Malaysian insurance sector: an analysis of risk-based capital regulation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(1), pages 146-172, January.
    2. Camino-Mogro, Segundo & Armijos-Bravo, Grace & Cornejo-Marcos, Gino, 2019. "Competition in the insurance industry in Ecuador: An econometric analysis in life and non-life markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 291-302.
    3. Veronika Varga & Zoltán Madari, 2023. "The Hungarian insurance market structure: an empirical analysis," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(3), pages 927-940, September.
    4. Qiao-Ming Lim & Hui-Shan Lee & Wai-Mun Har, 0. "Efficiency, productivity and competitiveness of the Malaysian insurance sector: an analysis of risk-based capital regulation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 0, pages 1-27.

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    More about this item

    Keywords

    Market Structure; General Insurance; Panzar-Rosse Model;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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