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Article
Insuring product markets
Economics Letters (2019)
  • Jeroen Hinloopen
  • Liting Zhou
Abstract
We formally link insurance markets with product markets and identify a demand effect of insurance: if risk-averse consumers can buy insurance against possible product failure, there will be some additional consumers that buy the product because they can also purchase protection. This demand-effect of insurance constitutes an increase in trade that is always to the benefit of both consumers and the supply side of the market, provided that the product price does not change in response to the possibility to purchase protection.
Keywords
  • product failure,
  • insured loss,
  • insurance,
  • product markets
Publication Date
June, 2019
DOI
https://doi.org/10.1016/j.econlet.2019.03.010
Citation Information
Jeroen Hinloopen and Liting Zhou. "Insuring product markets" Economics Letters Vol. 179 (2019) p. 5 - 8
Available at: http://works.bepress.com/hinloopen/45/