Rockets and feathers: Asymmetric pricing and consumer search - Evidence from electricity retailing

Sven Heim

No 16-070, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In many markets prices react stronger to rising than to falling costs. This asymmetric cost pass-through is still not fully understood, but recent theories suggest that asymmetric adjustments of consumers’ search efforts to rising and to falling prices may help to explain this. I use novel panel data to investigate the interaction of consumer search intensity, pricing and cost pass-through in the German residential electricity markets. I find that consumers search slightly more when prices rise but drastically decrease search efforts when they fall. Moreover, I find direct evidence that cost pass-through heavily depends on consumers’ search efforts.

Keywords: Consumer Search; Cost Pass-through; Rockets and Feathers (search for similar items in EconPapers)
JEL-codes: D83 L11 (search for similar items in EconPapers)
Date: 2019, Revised 2019
New Economics Papers: this item is included in nep-com, nep-ene, nep-eur, nep-mkt and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/193704/1/dp16070.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:16070

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().