2010 Fiscal Year Final Research Report
Measuring Efficiency Loss from Asymmetric Information in Insurance Markets
| Project/Area Number |
20730151
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Single-year Grants |
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| Research Field |
Applied economics
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| Research Institution | Tezukayama University |
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Principal Investigator |
SAITO Kuniyoshi Tezukayama University, 経済学部, 准教授 (00376964)
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| Project Period (FY) |
2008 – 2010
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| Research Abstract |
We develop a simple empirical method to measure the welfare loss in monopolistic insurance markets. We apply the method to the Japanese auto insurance market and found that the loss is around 15.4 percent compared to the competitive insurance market. We conjecture that the welfare loss primarily comes from the monopolistic market structure rather than asymmetric information problem, because the magnitude of adverse selection is small, if any.
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