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Switching Energy Suppliers: It’s Not All About the Money

Author

Listed:
  • David Deller

    (Centre for Competition Policy, University of East Anglia)

  • Monica Giulietti

    (School of Business and Economics, University of Loughborough)

  • Graham Loomes

    (Warwick Business School, University of Warwick)

  • Catherine Waddams Price

    (Centre for Competition Policy and Norwich Business School, University of East Anglia)

  • Ana Moniche Bermejo

    (Universidad de Malaga)

  • Joo Young Jeon

    (Department of Economics, University of Reading)

Abstract

Liberalised retail energy markets present an apparent puzzle: when offered the chance to buy a homogeneous product at a lower price, many consumers appear to leave ‘money on the table’. We observe the decisions made by over 7,000 consumers in a collective switching exercise and find that seemingly suboptimal consumer behaviour may be understood better if a sufficiently rich range of non-monetary ‘switching costs’ are identified. We discuss some policy implications for the expectations of consumer response in designing and regulating markets.

Suggested Citation

  • David Deller & Monica Giulietti & Graham Loomes & Catherine Waddams Price & Ana Moniche Bermejo & Joo Young Jeon, 2017. "Switching Energy Suppliers: It’s Not All About the Money," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2017-05, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2017_05
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    Citations

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    Cited by:

    1. Karle, Heiko & Schumacher, Heiner & Vølund, Rune, 2023. "Consumer loss aversion and scale-dependent psychological switching costs," Games and Economic Behavior, Elsevier, vol. 138(C), pages 214-237.
    2. Tomasz Rokicki & Piotr Bórawski & Barbara Gradziuk & Piotr Gradziuk & Aldona Mrówczyńska-Kamińska & Joanna Kozak & Danuta Jolanta Guzal-Dec & Kamil Wojtczuk, 2021. "Differentiation and Changes of Household Electricity Prices in EU Countries," Energies, MDPI, vol. 14(21), pages 1-21, October.
    3. Burlinson, Andrew & Giulietti, Monica & Battisti, Giuliana, 2018. "Technology adoption, consumer inattention and heuristic decision-making: Evidence from a UK district heating scheme," Research Policy, Elsevier, vol. 47(10), pages 1873-1886.
    4. Muyi Yang & Yuanying Chi & Kristy Mamaril & Adam Berry & Xunpeng Shi & Liming Zhu, 2020. "Communication-Based Approach for Promoting Energy Consumer Switching: Some Evidence from Ofgem’s Database Trials in the United Kingdom," Energies, MDPI, vol. 13(19), pages 1-16, October.
    5. Erdogan, Murside Rabia & Camgoz, Selin Metin & Karan, Mehmet Baha & Berument, M. Hakan, 2022. "The switching behavior of large-scale electricity consumers in The Turkish electricity retail market," Energy Policy, Elsevier, vol. 160(C).
    6. Feldhaus, Christoph & Lingens, Jörg & Löschel, Andreas & Zunker, Gerald, 2022. "Encouraging consumer activity through automatic switching of the electricity contract - A field experiment," Energy Policy, Elsevier, vol. 164(C).

    More about this item

    Keywords

    retail energy market; switching suppliers; probit models; behavioural consumers;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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