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A measure of switching Costs in the GB electricity retail market

Author

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  • Evens Salies

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

In most liberalised electricity retail markets, incumbent firms still hold the majority of residential consumers. This situation focused the attention of regulatory institutions and energy economists on the determinants of consumers switching decisions. Fewer studies have, however, been devoted to measuring switching costs. In the present paper we calculate these costs in the Great Britain electricity retail market by revisiting the model suggested in Shy, O. (2002), A quick-and-easy method for estimating switching costs, International Journal of Industrial Organization, 20, pp. 71–87. The average net cost of switching regional incumbents is €385 while the net cost of switching back to them is negative for customers on standard credit or direct debit plans but positive for prepayment customers.

Suggested Citation

  • Evens Salies, 2022. "A measure of switching Costs in the GB electricity retail market," Sciences Po Economics Publications (main) hal-03592459, HAL.
    • Handle: RePEc:hal:spmain:hal-03592459
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03592459
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    1. is not listed on IDEAS
    2. László Lörincz & Péter Nagy, 2010. "Switching Costs in Telecommunications: Conclusions from a Hungarian Survey," Chapters, in: Morten Falch & Jan Markendahl (ed.), Promoting New Telecom Infrastructures, chapter 11, Edward Elgar Publishing.
    3. Marco Magnani & Fabio M. Manenti & Paola Valbonesi, 2024. "Measuring Switching Costs in the Italian Residential Electricity Market," The Energy Journal, , vol. 45(2), pages 189-208, March.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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