The Impact of Information Policies and Loyalty Programs on Consumer Choices in Retail Energy Markets
(A2024-119706)

AUTHORS

Hester Huisman, University of Groningen; Evert de Haan, University of Groningen; Machiel Mulder, University of Groningen; Jaap Wieringa, University of Groningen

ABSTRACT

Regulators aim to improve information transparency in energy retail markets to foster informed decisions regarding energy contracts and increase consumer switch behaviour. Meanwhile, energy retailers are motivated to increase customer loyalty, as retention is more profitable than acquisition. Therefore, energy retailers’ actions might mitigate regulators’ efforts. We investigate the effects of contract standardisation (as a regulatory measure) and loyalty programs (as an action by retailers) on consumers’ choices and underlying preferences for different attributes of energy contracts. We conduct an online choice experiments with 400 respondents. The results indicate that energy retailers’ loyalty programs do not fully interfere with regulators’ efforts to improve market efficiency, but seem to restrict regulators’ efforts to encourage consumers to switch to renewable products. Our results attribute these effects to consumers’ limited attention, rather than perceived search costs.