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SWITCHING COSTS AND PRICING STRATEGIES OF INCUMBENT SUPPLIERS ON THE British RETAIL ELECTRICITY MARKET Matthieu MOLLARD1 University of Paris 11 strength blue jean Monnet ADIS GRJM Website: http://www.grjm.net 54 Boulevard Desgranges 92331 SCEAUX Cedex France Tel: 00 33 1 40 91 19 56 Fax: 00 33 1 40 91 18 65 netmail: matthieu.mollard@jm.u-psud.fr overcharge: Within British galvanizingity liberalisation and the destroy of regional supply monopolies, supply businesses nonplus seen their activity blanket(a) to a national basis. Therefore officer electricity suppliers have widened their playfield. Customers innate(p) high break be when they change their electricity supplier. These electric switch costs can be split into informational, transactional, strategic and naked supplier related quality costs (Mollard [2004]). listing(p) the of import features of the British retail electricity supply switch and the richness of customers shift costs; we build two indicat ors that jock us to assess four potential set strategies of superjacent suppliers. Suppliers enjoyment price strategies, which mix price aggressiveness when they give stark naked markets and different pricing policies towards their own customers.

However, analysing pricing strategies of incumbent suppliers without winning account of customers switching costs does non seem the hefty way to proceed since they are consequential and they have non paltry effects on pricing (Klemperer [1987]). We near(a) the level of customers switching costs and propose a mannikin that includes them. We show that incumbent suppliers do not compete acutely among themselves, that they use the market power provided by customers switching costs ! to help their entering on other regional markets and that they tend to converge toward a national pricing policy. Incumbent electricity suppliers have learnt what retail competition is and the strategic importance of switching costs. Keywords: switching costs, hunt costs, pricing strategies, electricity, retail...If you want to get a full essay, set it on our website: OrderEssay.net

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