Abstract
The purpose of this article is to measure economies of scale in the Austrian life insurance industry. Both absolute and average cost functions are estimated from cross section data for 34 companies. Average cost curves appear to be “L-shaped”, indicating a minimum efficient scale of about AS 150 million of premium income. It is concluded that, taking into consideration the size and probable growth of the life insurance market in Austria, economies of scale cannot serve as an argument to restrict entry of new competitors to this market.
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