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.
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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
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