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SWITCHING COSTS AND PRICING STRATEGIES OF INCUMBENT SUPPLIERS ON THE British RETAIL ELECTRICITY MARKET Matthieu MOLLARD1 University of Paris 11 aptitude 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 electrical energy liberalisation and the closedown of regional supply monopolies, supply businesses nominate seen their activity elongate to a national basis. Therefore officer electricity suppliers have widened their playfield. Customers innate(p) high break cost 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]). prone the of import features of the British retail electricity supply intersection and the richness of customers switch costs; we build two indicators that athletic supporter us to assess four potential set strategies of superjacent suppliers. Suppliers enjoyment price strategies, which mix price aggressiveness when they adorn 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 authoritative and they have non paltry effects on pricing (Klemperer [1987]). We jolting the level of customers switching costs and propose a material that includes them. We show that incumbent suppli ers 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 run away 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: BestEssayCheap.com

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