Estimation of Search Frictions in the British Electricity Market

Monica Giulietti, Michael Waterson and Matthijs Wildenbeest

No 270998, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper studies consumer search and pricing behaviour in the British domestic electricity market following its opening to competition in 1999. We develop a sequential search model in which an incumbent and an entrant group compete for consumers who find it costly to obtain information on prices other than from their current supplier. We use a large data set on prices and input costs to structurally estimate the model. Our estimates indicate that consumer search costs must be relatively high in order to rationalize observed pricing patterns. We confront our estimates with observed switching behaviour and find they match well.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 36
Date: 2010-08
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Estimation of Search Frictions in the British Electricity Market (2014)
Working Paper: Estimation of Search Frictions in the British Electricity Market (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270998

DOI: 10.22004/ag.econ.270998

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