Switching costs in the Swedish retail market for electricity

Oskar Hellquist () and Jesper Stage
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Oskar Hellquist: Luleå University of Technology and Uppsala University

Economics Bulletin, 2023, vol. 43, issue 1, 18 - 27

Abstract: We estimate monetary values for switching costs in the Swedish market for electricity for private household consumers, using two different numerical methods. The electricity providers in Sweden with over 1 per cent market share were studied. Switching costs were estimated to be between 50 per cent and 95 per cent of yearly costs for electricity. Considering that the electricity retail market was deregulated more than 20 years ago, and that the Swedish government continues to facilitate switching for consumers, it is noteworthy that switching costs are still this high. Given that electricity is a homogeneous product where switching costs are mainly due to transaction costs and psychological barriers to switching, it seems likely that switching costs may be even higher in other markets where there are additional barriers to switching.

Keywords: switching costs; electricity markets; Shy's method; Salies' method; Sweden (search for similar items in EconPapers)
JEL-codes: L1 (search for similar items in EconPapers)
Date: 2023-03-30
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