Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183489
Authors: 
Gugler, Klaus
Heim, Sven
Janssen, Maarten C. W.
Liebensteiner, Mario
Year of Publication: 
2018
Series/Report no.: 
ZEW Discussion Papers 18-042
Abstract: 
We study how consumer search affects pricing in markets with incumbents and entrants using panel data on German electricity retail markets. Consumers observe the baseline price of the incumbent and decide whether or not to search. Incumbent providers can price discriminate between searching and loyal consumers. Empirically we show that local incumbents increase their baseline rate while entrants decrease their tariffs if consumer search increases. Moreover, the incumbent price discriminates more strongly in markets with more consumer search. Using a theoretical model, we show that these pricing patterns are consistent with the strategic interaction of profit-maximizing firms.
Subjects: 
Search
Price Dispersion
Price Discrimination
Electricity
JEL: 
D43
D83
L11
L13
Q40
Document Type: 
Working Paper
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