Households’ switching of electricity supplier: the role of price and information search in Sweden

Sammanfattning

This study examines how electricity price changes influence households' propensity to switch electricity suppliers in the Swedish retail electricity market. Standard economic theory predicts that higher prices should incentivize such switching behavior. Still, switching rates remain relatively low. A theoretical framework is developed in which electricity price changes lead to attention and information search before potentially leading to switching behavior. The empirical analysis uses electricity price data from NordPool, Google Trends search data, and electricity supplier switching data from Statistics Sweden (SCB), to examine whether information search functions as a transmission mechanism between price changes and switching decisions. A two-step time-series approach with lagged variables is applied to capture dynamic relationships over time. The results show a positive relationship between electricity price, information search and electricity supplier switching. The relationship is particularly pronounced during periods of large electricity price increases, suggesting that households respond more actively to substantial price changes.