Consumer Switching in European Energy Markets: A Comparative Assessment

Competition is the most important driver of the restructuring and liberalisation of markets, especially energy markets, and it is accepted that consumer switching plays a significant role in creating competitive markets. This... [ view full abstract ]

Competition is the most important driver of the restructuring and liberalisation of markets, especially energy markets, and it is accepted that consumer switching plays a significant role in creating competitive markets. This paper examines the factors influencing consumer switching in European consumer markets using a micro-econometric analysis of consumer switching behaviour data from four pooled cross-sections of the European Commission's Consumer Market Monitoring Survey. It investigates the role of consumers' socio-demographic characteristics, together with their attitudes to the market, on the propensity to switch product/service or supplier in European consumer markets overall as well as the energy markets separately for comparison. The results provide evidence that consumer attitudes to the market are highly significant factors in explaining consumer switching behaviour in switching markets, and in energy markets more specifically. However, while consumer socio-demographic characteristics are significant factors in other switching markets, they are not significant factors in energy markets. Moreover, consumer complaints are revealed to matter most for consumer switching, while switching in energy markets is also found to be strongly associated with a higher propensity to switch in non-energy markets. Finally, there is strong evidence of heterogeneity in the effects on switching across EU Member States.