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SWITCHING COSTS AND PRICING STRATEGIES OF INCUMBENT SUPPLIERS ON THE British RETAIL ELECTRICITY MARKET Matthieu MOLLARD1 University of Paris 11 energy 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 electronic mail: matthieu.mollard@jm.u-psud.fr overcharge: Within British electrical energy liberalisation and the contain of regional supply monopolies, supply businesses countenance seen their activity elongated 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, strategical and naked supplier related quality costs (Mollard [2004]). abandoned the of import features of the British retail electricity supply production and the richness of customers transmutation cos ts; we build two indicators that benefactor us to assess four potential price strategies of incumbent suppliers. Suppliers enjoyment price strategies, which mix price aggressiveness when they consecrate 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 authorised and they have non paltry effects on pricing (Klemperer [1987]). We pass judgment the level of customers switching costs and propose a material that includes them. We show that incumbent suppliers do not compete aggressively a mong themselves, that they use the market po! wer provided by customers switching costs to help their entering on other regional markets and that they pass 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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