Do Consumers Switch to the Best Supplier?
This paper assesses the ability of consumers to choose between alternative suppliers. Across two independent datasets from the UK electricity market we find that consumers switching exclusively for price reasons appropriated only a quarter to half of the maximum gains available. While such behaviour can be explained by high search costs, the observation that 20-31% of the consumers actually reduced their surplus as a result of switching cannot. A brief analysis rejects an explanation involving suppliers' mis-selling tactics. Consumers may need direct protection, as well as good information, if their decisions are insufficiently accurate to engender competitive markets.
|Date of creation:||Apr 2007|
|Contact details of provider:|| Postal: Norwich, NR4 7TJ|
Phone: +44(0)1603 593715
Fax: +44(0)1603 591622
Web page: http://www.ccp.uea.ac.uk
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ccp:wpaper:wp07-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cheryl Whittkaer)
If references are entirely missing, you can add them using this form.