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Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia

Md. Main Uddin, Liang Wang and Russell Smyth ()

No 11-20, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We conduct an Online randomized controlled experiment in Australia in order to examine whether government initiatives to encourage the use of energy comparison sites increase consumer search and result in lower prices. Despite significant price variations across energy retailers, our experiment indicates that while providing information about the potential gains from using the governmentowned Victoria Energy Compare (VEC) website encourages participants to visit the website, it is not effective in inducing them to contact, or switch, retailers who are providing better offers. Moreover, the availability of a $50 bonus associated with using the VEC website reduces the likelihood that lowincome participants contact, or switch retailers, in order to lower their electricity prices, leading to an increase in their electricity expenditure. Our findings imply that government-initiated comparison sites are not sufficient to promote competition and that providing consumers with financial incentives for using these sites in order to encourage competition may potentially backfire.

Keywords: VEC; Financial incentive; Energy price; Field experiment; Australia (search for similar items in EconPapers)
JEL-codes: H24 H31 Q43 Q48 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-12
New Economics Papers: this item is included in nep-com, nep-ene and nep-exp
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