Switch on the competition; causes, consequences and policy implications of consumer switching costs

One possible reason why consumers may respond only weakly to differences in price and quality is high costs of switching to another firm.

This report presents a framework for analysing markets with switching costs and applies the framework in two empirical case studies. The first case study analyses the residential energy market, the second focuses on the market for social health insurance. In both markets, there are indications that switching costs are substantial. The report discusses policy options for reducing switching costs and for alleviating the consequences of switching costs.