Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130167
Authors: 
Gugler, Klaus
Heim, Sven
Liebensteiner, Mario
Year of Publication: 
2016
Series/Report no.: 
ZEW Discussion Papers 16-029
Abstract: 
We investigate the impact of consumer search and competition on pricing strategies in Germany's electricity retail. We utilize a unique panel dataset on spatially varying search requests at major online price comparison websites to construct a direct measure of search intensity and combine this information with zip code level data on electricity tariffs between 2011 and 2014. The paper stands out by explaining price dispersion by differing pricing strategies of former incumbents and entrant firms, which are distinct in their attributable shares in informed versus uninformed consumers. Our empirical results suggest causal evidence for an inverted U-shape effect of consumer search intensity on price dispersion in a clearinghouse environment as in Stahl (1989). The dispersion is caused by opposite pricing strategies of incumbents and entrants, with incumbents initially increasing and entrants initially decreasing tariffs as a reaction to more consumer search. We also find an inverted U-shape effect of competition on price dispersion, consistent with theoretical findings by Janssen and Moraga-González (2004). Again, the effect can be explained by opposing pricing strategies of incumbents and entrants.
Subjects: 
Search
Information
Competition
Price Dispersion
Electricity Retail
JEL: 
D43
D83
L11
L13
Q40
Document Type: 
Working Paper

Files in This Item:
File
Size
791.24 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.