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Household internal and external electricity contract switching in EU countries

: Schleich, Joachim; Faure, Corinne; Gassmann, Xavier


Applied Economics 51 (2019), No.1, pp.103-116
ISSN: 0003-6846
Journal Article
Fraunhofer ISI ()
electricity supplier switching; inertia; liberalization; risk and time preferences

Using a representative sample of more than 13,000 households from eight countries in the European Union (EU), this article empirically studies the factors related to household electricity contract switching by distinguishing between internal switchers (households that switched contracts but stayed with the same supplier) from external switchers (households that switched to a new supplier). The econometric analysis includes individual preferences, household structural factors and socio-demographic characteristics, as well as electricity market characteristics. The study explicitly explores the role of risk and time preferences on switching behaviours, with risk and time preferences elicited through incentivized experiments as well as self-assessment scales. The main results suggest that internal and external switching are not related to the same factors, that risk and time preferences affect switching behaviours, and that renters are less likely to switch than homeowners; further, electricity market characteristics are found to affect household electricity contract switching.