In:
American Economic Journal: Microeconomics, American Economic Association, Vol. 15, No. 1 ( 2023-02-01), p. 74-116
Abstract:
We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow us to disentangle different sources of inertia by using a rich combination of macromoments and micromoments. We find that consumers perceive contracts as differentiated and both limited awareness and switching costs hinder efficient choices. Our counterfactuals reveal substantial welfare gains from alleviating both frictions, in particular switching costs, and that a well-regulated monopoly can generate similar consumer surplus as the current deregulated market. (JEL D12, D83, L13, L43, L94, L98)
Type of Medium:
Online Resource
ISSN:
1945-7669
,
1945-7685
DOI:
10.1257/mic.20190163
Language:
English
Publisher:
American Economic Association
Publication Date:
2023
detail.hit.zdb_id:
2442378-6
detail.hit.zdb_id:
2452644-7
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