Customers usually differ from each other on many factors – purchase rates, price sensitivity, switching costs, rationality, time to respond etc. – and these differences affect the dynamics of competition. The table below gives some illustrative characteristics for two distinct customer groups in the electricity market discussed in Briefing 57.
Low users | High users | |
Fraction of customers in each group | 0.7 | 0.3 |
Quarterly usage | $400 | $600 |