Statistical Analysis of Market Penetration in a Mandatory Privatized Pension Market Using Generalized Logistic Curves

In this paper we analyze market penetration of the Mexican Pension System. This market is unique in two respects: it is mandatory and it is private. Very few markets in the world have these two characteristics. In Mexico, the pension system became privatized in July 1997. By the end of 1999, more than 98% of workers (in the formal sector) had affiliated themselves with some private pension provider. We used two simple statistical methods of analysis of market share to draw some conclusions about how market share unfolds in a mandatory but privatized market. Our first descriptive analysis is based on a generalized logistic growth curve and the second on some simple linear regression fitting. Our results show that individual pension funds did not have similar growth patterns. Early market leaders (in terms of market share) did not necessarily stay leaders in the end. However, the first 12 months turned out to be critical for market share.