Consumer's behavior determinants after the electricity market liberalization: the Portuguese case

Abstract

Electricity markets have been liberalized worldwide, but the success of country specific experiences varied widely. Consumers' behavior is among the key factors for successful liberalization experiences namely regarding the decision to switch operator. This decision has been shown to be influenced by a multiplicity of factors. The goal of this article is to explore the analysis of the drivers for switching operator in a liberalized electricity market. With that purpose, we focused on the residential Portuguese case using a questionnaire. The logit estimation showed that men are more likely to switch supplier than women and that larger families are less likely to do so probably, due to the perception of high information search costs. Other sociodemographic variables were not found to be statistically significant. Regarding specific determinants, our results showed that past experiences with a supplier, dissatisfaction with the current operator, and family and friends' experiences were the most important determining factor for the decision to switch operator. Hence, the price was not the most important determinant. We also explored if different income groups had differentiated responses regarding the main drivers but concluded that there was no evidence that the income group affected the importance given to the price or to the other determinants for the decision.