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| Author: | Wilson, C.M. Price, C.W. |
| Title: | Do consumers switch to the best supplier? |
| Journal: | Oxford Economic Papers
2010 : OCT, VOL. 62:4, p. 647-668 |
| Index terms: | consumer choice consumer behaviour electricity industry markets suppliers United Kingdom |
| Language: | eng |
| Abstract: | This paper shows that consumers' ability to choose the best alternative supplier is limited even in a relatively transparent and simple market. Across two independent datasets from the U.K. electricity market, it is found, on aggregate level, that those consumers switching exclusively for price reasons appropriated less than a half of the available gains. While such outcomes can be explained by high search costs, the observation that at least 17 percent of consumers actually reduced their surplus as a result of switching cannot. An explanation of incorrect demand prediction is ruled out. Instead, other explanations are tested, incl. mis-selling. |
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