Essay About Consumer Attitudes And Beneficial Impact Of Competition

Consumer Attitudes to Utility Products
Consumer attitudes to utility products: a consumer behaviour perspective:
Recent figures released by the Department of
Trade and Industry (DTI, 2001a) suggest that,
on average, combined household utility bills
in the UK have fallen by £129 since 1996 (DTI,
2001b). This reduction has been attributed to
the beneficial impact of competition within
the telecoms, gas and electricity markets,
extending choice among consumers and
provoking rivalry and price reduction among
suppliers. This success’’ represents to
advocates of the process the fulfilment of a
key objective of the privatisation of these
industries; that market discipline would
produce operating efficiency and so ensure
that the goods and services preferred by the
consumer (would be) delivered at the lowest
economic cost’’ (Moore, 1983, p. 93).
Dissenting voices would inevitably disagree
with this analysis[1].
However, it is instructive to note that this
reduction in costs to the consumer has been
achieved despite what may be identified as
the partial operation’’ of the chosen
competitive mechanism. The utility
industries were structured to encourage
competition among rival service providers,
either as an element of the initial legislation
(in the electricity privatisation), or following
amending legislation (as with
telecommunications and gas). The approach
has been described as forcing’’ competition
(Burton, 1997), in that new entrants were
provided with incentives to develop new
markets, often at the expense of dominant
incumbents who were prevented from
engaging in competition until the new
entrants