The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Nov, 1970, Volume 38, Issue 6
https://doi.org/0012-9682(197011)38:6<856:EOSIFI>2.0.CO;2-5
p. 856-864
David B. Houston, Richard M. Simon
Average cost functions for the life insurance industry, all of which show increasing and then constant returns, are estimated from cross section data for 237 companies. The special problems of measuring output, controlling for product mix, and accounting for the effect of rate of growth in output are examined and dealt with. The article concludes that average costs are constant beyond $100 million of premiums.
