A Measure of Switching Costs in the GB Electricity Retail Market
AbstractIn most liberalised electricity retail markets, incumbent firms still hold the majority of residential consumers. This situation focused the attention of regulatory institutions and energy economists on the determinants of consumers switching decisions. Fewer studies have, however, been devoted to measuring switching costs. In the present paper we calculate these costs in the Great Britain electricity retail market by revisiting the model suggested in Shy, O. (2002), A quick-and-easy method for estimating switching costs, International Journal of Industrial Organization, 20, pp. 71–87. The average net cost of switching regional incumbents is €385 while the net cost of switching back to them is negative for customers on standard credit or direct debit plans but positive for prepayment customers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 28255.
Date of creation: Jun 2005
Date of revision: Apr 2007
Electricity Retail; Switching Costs; Undercut-Proof Property;
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jackie Krafft & Evens Salies, 2006.
"The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies","
Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE)
2006-16, Observatoire Francais des Conjonctures Economiques (OFCE).
- Evens Salies & Jackie Krafft, 2006. "The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies," Sciences Po publications, Sciences Po nÂ°2006-16, Sciences Po.
- Monica Giulietti & Catherine Waddams Price & Michael Waterson, 2005. "Consumer Choice and Competition Policy: a Study of UK Energy Markets," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(506), pages 949-968, October.
- Shy, Oz, 2002. "A quick-and-easy method for estimating switching costs," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 20(1), pages 71-87, January.
- Waterson, Michael, 2001.
"The role of consumers in competition and competition policy,"
The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics
607, University of Warwick, Department of Economics.
- Waterson, Michael, 2003. "The role of consumers in competition and competition policy," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(2), pages 129-150, February.
- Klemperer, Paul, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 102(2), pages 375-94, May.
- Waddams Price, Catherine & Bennett, Matthew, 1999. "New gas in old pipes: opening the UK residential gas market to competition," Utilities Policy, Elsevier, Elsevier, vol. 8(1), pages 1-15, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.