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Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia

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  • Uddin, Main
  • Wang, Liang Choon
  • Smyth, Russell

Abstract

We conduct an online randomized controlled experiment in Australia in order to examine whether government initiatives to encourage the use of energy comparison sites increase consumer search and result in lower prices. Despite significant price variations across energy retailers, our experiment indicates that while providing information about the potential gains from using the government-owned Victoria Energy Compare (VEC) website encourages participants to visit the website, it is not effective in inducing them to contact, or switch, retailers who are providing better offers. Moreover, low-income individuals who visited the VEC website due to the availability of a $50 bonus are less likely to contact retailers for a better deal in order to switch retailers, and end up paying a higher cost of per unit kWh electricity and spending more on total electricity expenditure. Our findings imply that promoting government-initiated comparison sites is not sufficient to increase competition and that providing consumers with financial incentives for using these sites in order to encourage competition and improve outcomes of the energy poor may potentially backfire.

Suggested Citation

  • Uddin, Main & Wang, Liang Choon & Smyth, Russell, 2021. "Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 167-182.
    • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:167-182
    DOI: 10.1016/j.jebo.2021.05.016
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    More about this item

    Keywords

    VEC; Financial incentive; Energy price; Field experiment; Australia;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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