Behavioral aspects of regulation: A discussion on switching and demand response in Turkish electricity market

Sirin, Selahattin Murat and Gönül, Sinan (2016) Behavioral aspects of regulation: A discussion on switching and demand response in Turkish electricity market. Energy Policy, 97. pp. 591-602. ISSN 0301-4215

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Official URL: https://doi.org/10.1016/j.enpol.2016.08.005

Abstract

Electricity sector has been transformed from state-owned monopolistic utilities to competitive markets with an aim to promote incentives for improving efficiency, reducing costs and increasing service quality to customers. One of the cardinal assumptions of the liberalized and competitive electricity markets is the rational actor, and decision-makers are assumed to make the best decisions that maximize their utility. However, a vast literature on behavioral economics has shown the weakness of economic theory in explaining and predicting individuals’ decision-making behavior. This issue is quite important for competition in electricity markets in which consumers’ preferences have a significant role. Despite its importance, this issue has almost been neglected in Turkey, which has taken major steps in electricity sector restructuring. Therefore, this paper aims to examine switching and demand response behavior in Turkish electricity market by using multiple correspondence and panel data analysis, and findings are discussed in light of the neoclassical and behavioral economics literature. Analyses’ results show that consumers’ switching and demand response behavior is consistent with the neoclassical literature to some extent; however, behavioral factors are also affecting consumers’ decisions. Furthermore, there are systemic problems that hinder effective functioning of the electricity market and restrict competition.

Item Type: Article
Uncontrolled Keywords: Behavioral economics, Switching, Demand response, Electricity market, Turkey
Subjects: N100 Business studies
Department: Faculties > Business and Law > Newcastle Business School > Business and Management
Depositing User: Becky Skoyles
Date Deposited: 10 Jan 2018 16:13
Last Modified: 10 Jan 2018 16:13
URI: http://nrl.northumbria.ac.uk/id/eprint/33068

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