Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104459
Authors: 
Nell, Martin
Richter, Andreas
Schiller, Jörg
Year of Publication: 
2006
Series/Report no.: 
Discussion Papers in Business Administration 2006-02
Abstract: 
This paper looks at markets characterized by the fact that the demand side is insured. In these markets a consumer purchases a good to compensate consequen¬ces of unfavorable events, such as an accident or an illness. Insurance policies in most lines of insurance base indemnity on the insured’s actual expenses, i.e., the insured would be partially or completely reimbursed when purchasing certain goods. In this setting we discuss the interaction between insurance and repair markets by focusing, on the one hand, upon the development of prices and the structure of markets with insured consumers, and, on the other hand, the resulting backlash on optimal insurance contracting. We show that even in the absence of ex post moral hazard the extension of insurance coverage will lead to an increase in prices as well as to a socially undesirable increase in the number of repair service suppliers, if repair markets are imperfect.
Subjects: 
insurance
incomplete contracts
repair markets
JEL: 
C72
D43
G22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.