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Oxford Economic Papers Advance Access published online on September 2, 2009
Oxford Economic Papers, doi:10.1093/oep/gpp029
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© Oxford University Press 2009 All rights reserved

Pricing behaviour under competition in the UK electricity supply industry

Monica Giulietti*, Jesus Otero{dagger}, and Michael Waterson{ddagger}

* Nottingham University Business School
{dagger} Facultad de Economía, Universidad del Rosario, Bogota, Colombia
{ddagger} Department of Economics, University of Warwick, Coventry CV4 7AL; e-mail: michael.waterson{at}warwick.ac.uk

JEL classifications: L43, L13, L94, C22, C23


  Abstract

This paper investigates the evolution of electricity prices for domestic customers in the UK following the introduction of competition. The empirical analysis is based on a panel data set containing detailed information about electricity supply prices over the period 1999 to 2006. The analysis examines the pricing patterns and draws inferences concerning the benefits of incumbency and the gains from search. The econometric analysis of persistence and price dispersion provides rather limited support for the view that the market is becoming more competitive and also indicates that there remain significant potential benefits to consumers from searching alternative suppliers.


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