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Estimation of search frictions in the British electricity market
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Giulietti, Monica, Waterson, Michael and Wildenbeest, Matthijs R. (2014) Estimation of search frictions in the British electricity market. The journal of industrial economics, 62 (4). pp. 555-590. doi:10.1111/joie.12062 ISSN 0022-1821.
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Official URL: http://dx.doi.org/10.1111/joie.12062
Abstract
This paper studies consumer search and pricing behavior in the British domestic electricity market following its opening to competition in 1999. We develop a sequential search model in which an incumbent and an entrant group compete for consumers who find it costly to obtain information on prices other than from their current supplier. We use a large data set on prices and input costs to structurally estimate the model. Our estimates indicate that consumer search costs must be relatively high in order to rationalize observed pricing patterns. We confront our estimates with observed switching behavior and find they match well.
Item Type: | Journal Article | ||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce |
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Divisions: | Faculty of Social Sciences > Economics Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Electric power consumption -- Great Britain, Electric utilities | ||||||
Journal or Publication Title: | The journal of industrial economics | ||||||
Publisher: | Wiley-Blackwell Publishing Ltd. | ||||||
ISSN: | 0022-1821 | ||||||
Official Date: | December 2014 | ||||||
Dates: |
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Volume: | 62 | ||||||
Number: | 4 | ||||||
Number of Pages: | 36 | ||||||
Page Range: | pp. 555-590 | ||||||
DOI: | 10.1111/joie.12062 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||
Date of first compliant deposit: | 30 December 2015 | ||||||
Date of first compliant Open Access: | 22 December 2017 | ||||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC) | ||||||
Grant number: | RES 00-22-1686 (ESRC) |
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