Consumer Preference Not to Choose: Methodological and Policy Implications

Timothy Brennan

RFF Working Paper Series from Resources for the Future

Abstract: Residential consumers remain reluctant to choose new electricity suppliers. Even the most successful jurisdictions, four U.S. states and other countries, have had to adopt extensive consumer education procedures that serve largely to confirm that choosing electricity suppliers is daunting. Electricity is not unique in this respect; numerous studies find that consumers are generally reluctant to switch brands, even when they are well-informed about product characteristics. If consumers prefer not to choose, opening regulated markets can reduce welfare, even for some consumers who do switch, as the incumbent can exploit this preference by raising price above the formerly regulated level. Policies to open markets might be successful even if limited to industrial and commercial customers, with residential prices based on those in nominally competitive wholesale markets.

Keywords: electricity markets; deregulation; consumer choice; residential markets (search for similar items in EconPapers)
JEL-codes: B40 D11 L51 L94 (search for similar items in EconPapers)
Date: 2005-11-11
New Economics Papers: this item is included in nep-com and nep-ene
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Consumer preference not to choose: Methodological and policy implications (2007)
Working Paper: Consumer Preference Not to Choose: Methodological and Policy Implications (2005)
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