Business, Management and Accounting
4 years ago

German electricity prices soar as consumers search, incumbents exploit pricing power.

SSRN Electronic Journal
Market Liberalization: Price Dispersion, Price Discrimination and Consumer Search in the German Electricity Markets
Klaus Gugler, Sven Heim, Maarten Janssen, Mario Liebensteiner

Paper Summary

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Consumer search behavior impacts pricing in the German electricity market. Local incumbents raise prices when consumers search more, while new entrants lower prices. Incumbents charge loyal customers more than those who search for better deals. This price discrimination is more pronounced in markets with higher consumer search. These pricing trends align with profit-driven strategies of firms in the market.