Consumer inertia and firm incumbency in liberalised retail electricity markets: an empirical investigation

Massimo Dragotto (), Marco Magnani () and Paola Valbonesi
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Massimo Dragotto: Dept. of Economics and Management, University of Padova, Italy
Marco Magnani: Dept. of Economics and Management, University of Padova, Italy and Italian Regulatory Authority for Energy, Network and the Environment (ARERA)

No 277, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: By exploiting an original 4-year dataset on the Italian retail electricity market, we investigate the relationship between firm incumbency — measured by market concentration at the regional level — and consumer inertia — identified by the yearly percentage of consumers switching providers and/or contract, both from the regulated to the free market and within the free market. Our main results show that i) regions recording stronger firm incumbency exhibit larger consumer inertia in leaving the regulated market, this effect being reinforced by the number of active free market retailers; ii) switching by consumers who already are in the free market is, instead, positively affected by firm incumbency. In light of these results, we provide prescriptions for policymakers targeting the migration of consumers towards free-market contracts and, consequently, full energy market liberalisation.

Keywords: Electricity Retail Markets; Liberalisation in Electricity Markets; Incumbency; Consumer Behaviour (search for similar items in EconPapers)
JEL-codes: D12 L11 L98 Q48 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-11
New Economics Papers: this item is included in nep-com, nep-ene, nep-eur, nep-ind and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0277

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