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STRUCTURE, CONDUCT AND PERFORMANCE ANALYSIS OF THE SOUTH AFRICAN AUTO INSURANCE MARKET: 1980‐2000
Author(s) -
Liebenberg André p.,
Kamerschen David R.
Publication year - 2008
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2008.00178.x
Subject(s) - underwriting , market power , market structure , economics , market share analysis , market microstructure , actuarial science , business , financial economics , order (exchange) , finance , microeconomics , monopoly
The traditional structure‐conduct‐performance framework makes the explicit prediction that market structure determines market conduct, performance and power. The primary goal of this study is to evaluate this prediction using the South African (SA) short‐term auto insurance market. The empirical evidence shows that a link between market structure and market conduct, performance and/or power is not present. “Prices” and profits are not statistically significantly related to various sellers’ concentration measure and do not follow any explicit trend over time. By construction, profits are directly related to “prices” and follow a cyclical trend, as observed in other countries. A secondary goal of this paper is to compare the findings for the US auto insurance market with the empirical evidence on the SA auto insurance market. While there are few similarities, there is an underwriting cycle in the SA auto insurance market such as is observed for the US auto insurance market.