Estimation of Search Frictions in the British Electricity Market

Monica Giulietti, Michael Waterson and Matthijs Wildenbeest

The Warwick Economics Research Paper Series (TWERPS) 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 nd 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 stimates with observed switching behaviour and nd they match well. Keywords:

Keywords: electricity; consumer search; price competition JEL Classification: C14; D83; L13 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ene, nep-eur, nep-mkt and nep-reg
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Citations: View citations in EconPapers (10)

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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:wrk:warwec:940

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