TY  - JOUR
AU  - Bernstein,Jeffrey I.
TI  - Information Spillovers, Margins, Scale and Scope: With an Application to Canadian Life Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3979
PY  - 1992
Y2  - December 1992
UR  - http://www.nber.org/papers/w3979
L1  - http://www.nber.org/papers/w3979.pdf
N1  - Author contact info:
Jeffrey I. Bernstein
Department of Economics
University Park Campus
Florida International University
11200 S.W. 8th Street
Miami, FL 33199
Tel: 305/348-2592
E-Mail: jeffrey.bernstein@fiu.edu
AB  - This paper develops a model of the production of life insurance services. The focus is on price setting ability and the cost advantages from size and diversity. The model characterizes insurers decisions on the face value and number of policies and the number of insurance lines. The model is applied to Canadian life insurance firms. Price-cost margins average from 13% to 40%. These margins emanate from information spillovers generated by marketing activities. Cost advantages due to size are small, but are substantial from diversity. Returns to scale average from 1.13 to 1.40, while returns to scope average from 70% to 100%.
ER  -