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Un-cashed switching benefits: Loyalty or lock-ins? The case of district heating in Sweden
Responsible organisation
2008 (English)Conference paper (Refereed) PublishedAlternative title
Outnyttjade bytesintäkter : Loyalitet eller inlåsning? Den svenska fjärrvärmemarknaden (Swedish)
Abstract [en]

The paper argues for and defines a locked-in consumer as a consumer that is involuntary locked into a system or supplier in spite of an economic incentive to change. A locked-in consumer is therefore not seen as a loyal consumer, which instead is assumed to be loyal to a system or supplier in spite a similar economic gain of switching. Assuming well functioning ex-ante competition the study calculates switching costs for switching from district heating to pellet burners or heat pumps the reason being that district heating is a natural monopoly and has as such been criticized for an eventual abuse of this position. The analysis show that there exists relatively substantial switching benefits of switching from district heating to pellet burning or heat pumps in, for example, residential areas in Stockholm. With limited available relevant markets, district heating being the only alternative, this negative switching cost cannot be capitalized and represents, in the assumed absence of loyal customers, a lock-in effect. The result indicates that we cannot reject the idea that the district heating plants serving residential areas in Stockholm use their dominant position with a reduction of the social welfare as a result.

Abstract [sv]

Artikeln belyser frågan kring användandet av byteskostnader eller bytesintäkter för att beskriva en eventuell inlåsningseffekt för fjärrvärmekunder.

Place, publisher, year, edition, pages
Berlin, 2008.
Keyword [en]
Fjärrvärme, Byteskostnader, Bytesintäkter, Loyalitet, Inlåsning
National Category
URN: urn:nbn:se:bth-8405Local ID: diva2:836128
Available from: 2012-09-18 Created: 2008-08-27 Last updated: 2015-06-30Bibliographically approved

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