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