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Article: Insurance and the Behavior of Competitive Firms under Revenue Risks: A Note

TitleInsurance and the Behavior of Competitive Firms under Revenue Risks: A Note
Authors
KeywordsMarket insurance
Revenue risks
Self-insurance
Variable premium schemes
Issue Date2000
PublisherSpringer-Verlag Wien. The Journal's web site is located at http://www.springer.at/jecon
Citation
Journal Of Economics/ Zeitschrift Fur Nationalokonomie, 2000, v. 71 n. 3, p. 305-314 How to Cite?
AbstractThis paper re-examines the model of Ford, Mpuku, and Pattanaik ["Revenue Risks, Insurance, and the Behavior of Competitive Firms." Journal of Economics 64 (1996): 233-246] wherein a risk-averse competitive firm faces insurable revenue risk. The optimal output and insurance cover of the firm are shown to be deterministically related in that the marginal costs of self-insurance and market insurance are equated. In response to increasing risk aversion, the firm always takes a higher insurance cover. Increasing fixed costs generate an income effect which induces the firm to take a higher insurance cover should the preference of the firm satisfy decreasing absolute risk aversion. Market insurance and self-insurance can be either substitutes or complements, depending on the shape of the variable insurance-premium schedule.
Persistent Identifierhttp://hdl.handle.net/10722/85722
ISSN
2015 Impact Factor: 0.914
2015 SCImago Journal Rankings: 0.418
References

 

DC FieldValueLanguage
dc.contributor.authorWong, KPen_HK
dc.date.accessioned2010-09-06T09:08:25Z-
dc.date.available2010-09-06T09:08:25Z-
dc.date.issued2000en_HK
dc.identifier.citationJournal Of Economics/ Zeitschrift Fur Nationalokonomie, 2000, v. 71 n. 3, p. 305-314en_HK
dc.identifier.issn0931-8658en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85722-
dc.description.abstractThis paper re-examines the model of Ford, Mpuku, and Pattanaik ["Revenue Risks, Insurance, and the Behavior of Competitive Firms." Journal of Economics 64 (1996): 233-246] wherein a risk-averse competitive firm faces insurable revenue risk. The optimal output and insurance cover of the firm are shown to be deterministically related in that the marginal costs of self-insurance and market insurance are equated. In response to increasing risk aversion, the firm always takes a higher insurance cover. Increasing fixed costs generate an income effect which induces the firm to take a higher insurance cover should the preference of the firm satisfy decreasing absolute risk aversion. Market insurance and self-insurance can be either substitutes or complements, depending on the shape of the variable insurance-premium schedule.en_HK
dc.languageengen_HK
dc.publisherSpringer-Verlag Wien. The Journal's web site is located at http://www.springer.at/jeconen_HK
dc.relation.ispartofJournal of Economics/ Zeitschrift fur Nationalokonomieen_HK
dc.subjectMarket insuranceen_HK
dc.subjectRevenue risksen_HK
dc.subjectSelf-insuranceen_HK
dc.subjectVariable premium schemesen_HK
dc.titleInsurance and the Behavior of Competitive Firms under Revenue Risks: A Noteen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0931-8658&volume=17&spage=305&epage=314&date=2000&atitle=Insurance+and+the+Behaviour+of+Competitive+Firms+under+Revenue+Risks:+A+Noteen_HK
dc.identifier.emailWong, KP: kpwongc@hkucc.hku.hken_HK
dc.identifier.authorityWong, KP=rp01112en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1007/BF01228745-
dc.identifier.scopuseid_2-s2.0-0346639601en_HK
dc.identifier.hkuros52591en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0346639601&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume71en_HK
dc.identifier.issue3en_HK
dc.identifier.spage305en_HK
dc.identifier.epage314en_HK
dc.publisher.placeAustriaen_HK
dc.identifier.scopusauthoridWong, KP=7404759417en_HK

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