Switching costs are unobserved costs for the consumer when switching between two functionally identical products or services. These costs can take both monetary and non- monetary values, which makes them hard to estimate. The purpose of this study is to empirically estimate switching costs on the Swedish market for electricity for private consumers, and also review two methods to identify which one more suitable for the purpose. Shy’s (2002) method uses prices and market shares to estimate the costs, and Salies’ (2012) method is an extension of Shy’s method, that lifts two major limitations. Electricity providers with over 1 percent market share have been included. For each provider, prices for the three most used contract types have been gathered and used in the estimation. Prices have been limited to households with energy usage of 2 000 kWh per year. Switching costs have been estimated to between 50 – 95 percent of the yearly costs for electricity. The switching costs are higher when switching from a big firm to a smaller, than the other way around. This could indicate that customers become involuntarily locked-in to bigger firms because of the switching costs, giving bigger firms stronger market positions.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:ltu-85178 |
| Date | January 2021 |
| Creators | Hellquist, Oskar |
| Publisher | Luleå tekniska universitet, Institutionen för ekonomi, teknik, konst och samhälle |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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