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The impact of price comparison tools on electricity retailer choices

Author

Listed:
  • Peter Gibbard
  • Kevin Remmy

Abstract

We estimate a structural model of electricity retailer choices accommodating various sources of consumer inertia, including inattention, limited information, switching costs, and product differentiation. The model disentangles the relative importance of different frictions. We estimate our model using individual-level data of all retailer switches and queries on a price comparison website in New Zealand. We find that price comparison tools strongly impact market structure and consumer surplus. However, mandating all consumers search for alternatives has stronger effects on market structure and consumer surplus gains. Our results help policymakers design policies that improve consumer choices and effective competition in retail markets.

Suggested Citation

  • Peter Gibbard & Kevin Remmy, 2024. "The impact of price comparison tools on electricity retailer choices," CRC TR 224 Discussion Paper Series crctr224_2024_516, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2024_516
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp516
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    More about this item

    Keywords

    consumer inertia; consumer search; retail electricity markets; structural demand estimation;
    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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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