Determinants of Price Comparison and Supplier Switching Rates in Selected Sectors

Jürgen Janger
Authors registered in the RePEc Author Service: Helmut Elsinger

Monetary Policy & the Economy, 2010, issue 1, 66–86

Abstract: This study looks into the factors determining price comparisons and supplier switching as revealed by a representative survey of Austrian consumers. Price comparisons and supplier switching can be interpreted as a measure of the competitive pressure that consumers exert on enterprises. Thereby, they influence the intensity of competition in an industry, which in its turn, curbs inflation and boosts growth. The fundamental driver of switching is the comparison of prices. Those who compare prices not only consider price comparisons but also switching less cumbersome and, hence, switch suppliers more frequently. To a certain extent, search as well as switching costs are perceived to be higher than they actually are, i.e. persons inexperienced in searching and switching suppliers overestimate the difficulties involved. Price comparison behavior is determined by educational attainment (education levels above apprenticeships), gender and (urban or rural) residence. While Internet use is limited for price comparisons, it reduces the efforts required for comparing prices and switching suppliers to a highly significant extent in all sectors. Moreover, search and switching costs play a major role in explaining sectoral differences in price comparison behavior. Therefore, competition intensity could be increased through education reforms, the promotion of Internet usage, sector- specific reductions of search and switching costs as well as awareness-raising measures. The results can be used for further analyses in the field of competition, productivity and inflation.

Keywords: switching costs; market elasticity; consumer behavior; competition intensity (search for similar items in EconPapers)
JEL-codes: D12 L40 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.oenb.at/dam/jcr:d9653cea-6704-4a5b-8d8 ... _04_tcm16-190416.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:onb:oenbmp:y:2010:i:1:b:4

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Monetary Policy & the Economy is currently edited by Gerhard Fenz and Maria Teresa Valderrama

More articles in Monetary Policy & the Economy from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Rita Glaser-Schwarz ().