Smart Meters, Personalized Feedback and Retailer Switching in Electricity Markets
34 Pages Posted: 5 Mar 2016
Date Written: February 3, 2016
This paper uses a randomized experiment and a structural model to study the extent to which consumers value receiving personalized feedback from smart electricity meters. Using data from a market with retail competition, we examine whether consumers “vote with their feet”, either by switching retailers or exhibiting increased loyalty for their existing retailer, in response to messages they receive based on their smart meter data. We find consumers value being informed: randomly offering information from smart meters to consumers reduces the overall switching rate by 8%. Among customers who engage with their smart meter data we find a 21% reduction in retailer switching.
Keywords: Retail search, personalized feedback, smart meters, electricity
JEL Classification: D83, L13, L86
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