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Firm size distribution: testing the "independent submarkets model" in the Italian motor insurance industry

By Luigi Buzzacchi and Tommaso Valletti


This paper tests the presence of multiple independent submarkets in the Italian motor insurance industry. Independence is motivated by administrative boundaries among provinces and by further locational reasons. We find that the independence effects are sufficient to induce a minimum degree of inequality in the size distribution of firms once submarkets are aggregated. These results are fully consistent with the predictions of Sutton (1998). We also show that the degree of skewness in the firms size distribution is related to characteristics such as the population living in an area, its density and the riskiness of a submarket

Topics: HD Industries. Land use. Labor
Publisher: Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science
Year: 1999
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Provided by: LSE Research Online

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