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Search costs and switching behaviour in the British electricity market
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Gmlietti, Monica, Waterson, Michael and Wildenbeest, Matthys (2012) Search costs and switching behaviour in the British electricity market. In: 9th International Conference on the European Energy Market, EEM 12, Florence, Italy, 10-12 May 2012. Published in: 9th International Conference on the European Energy Market pp. 1-8. doi:10.1109/EEM.2012.6254708
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Official URL: http://dx.doi.org/10.1109/EEM.2012.6254708
Abstract
This paper investigates consumer search and pricing behaviour in the British domestic electricity market since the removal of all retail price controls in 2002. We rely on estimated search costs to predict the number of consumers switching supplier in the period 2002-2005. The search costs are generated from a sequential search model in which an incumbent and a group of entrants compete for consumers who find it costly to obtain information on prices. Our predicted numbers of switchers are in line with observed switching behaviour both over time and by geographical area. We extend our predictions to the out-of-sample year 2006 and find that we over predict the number of switchers but are still able to predict regional rankings well. We ascribe this result to an increased number and complexity of the retail tariffs on offer.
Item Type: | Conference Item (Paper) | ||||
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Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | 9th International Conference on the European Energy Market | ||||
Publisher: | IEEE | ||||
Book Title: | 2012 9th International Conference on the European Energy Market | ||||
Official Date: | 2012 | ||||
Dates: |
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Page Range: | pp. 1-8 | ||||
DOI: | 10.1109/EEM.2012.6254708 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Conference Paper Type: | Paper | ||||
Title of Event: | 9th International Conference on the European Energy Market, EEM 12 | ||||
Type of Event: | Conference | ||||
Location of Event: | Florence, Italy | ||||
Date(s) of Event: | 10-12 May 2012 |
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