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Competition in the German Electricity Retail Business: Innovation and Growth Strategies

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  • Amelung, Torsten

Abstract

This paper describes the development of the competition of electricity retail in Europe in general and the situation in Germany in particular. The competition in the retail business has been forcing electricity retailers to spend increasing resources on marketing, sales and customer service. This has led to a fierce competition both especially in Germany as price transparency is quite high. Short-term price adjustments by retail companies are led by behavioral patterns that follow the logic of the prisoner’s dilemma. Suppliers view marketing and sales expenditures as a short-term investment, thus weighing costs of winning new customers against the risk that customers might switch again in the medium-run. In order to escape this short-term competitive pressure, an increasing number of retail companies in the German electricity retail market focus on the diversification of their activities by offering new product lines such as distributed energy solutions, services for e-mobility and facility management. Moreover, there is a trend towards investing in the development of a brand to increase customer loyalty.

Suggested Citation

  • Amelung, Torsten, 2020. "Competition in the German Electricity Retail Business: Innovation and Growth Strategies," EconStor Preprints 215622, ZBW - Leibniz Information Centre for Economics, revised 2020.
    • Handle: RePEc:zbw:esprep:215622
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    File URL: https://www.econstor.eu/bitstream/10419/224983/1/TAmelung-CompetitionGermanElectricityRetail.pdf
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    Cited by:

    1. Amelung, Torsten, 2021. "The Impact of Distributed Solar Power Generation on the Demand and the Use of Electricity in Households," EconStor Research Reports 235236, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    short term competition; second-mover-advantage; product versioning; diversification; distributed energy solutions; brand strategy; digitalization; affiliate marketing;
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