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Oskar Hellquist and Jesper Stage
''Switching costs in the Swedish retail market for electricity''
( 2023, Vol. 43 No.1 )
We estimate monetary values for switching costs in the Swedish market for electricity for private household consumers, using two different numerical methods. The electricity providers in Sweden with over 1 per cent market share were studied. Switching costs were estimated to be between 50 per cent and 95 per cent of yearly costs for electricity. Considering that the electricity retail market was deregulated more than 20 years ago, and that the Swedish government continues to facilitate switching for consumers, it is noteworthy that switching costs are still this high. Given that electricity is a homogeneous product where switching costs are mainly due to transaction costs and psychological barriers to switching, it seems likely that switching costs may be even higher in other markets where there are additional barriers to switching.
Keywords: switching costs, electricity markets, Shy's method, Salies' method, Sweden
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Dec 28 2022 Manuscript Accepted : Mar 30 2023

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