March 21, 2016
(by Chris Hanretty) Rankings, ratings and reviews are common in life.
They claim to tell us which are the best films, the best albums, even the best universities.
Ratings are particularly useful for credence goods — goods the quality of which we poor consumers can’t judge.
Law is a good example of a credence good. I might hire a lawyer to represent me in court. I might even attend the court hearing. But I’d have no way of telling whether the lawyer’s arguments were good or bad. If I knew which arguments were good or bad, I could probably have saved some money and represented myself.
It’s therefore no surprise to see that there are lots of rankings for lawyers in the UK. One company (Chambers & Partners) is particularly known for ranking barristers — the kind of lawyers who earn their crust standing up and arguing cases in court.
Does this mean that you should always try and get the best-ranked barrister to represent you? Read the rest of this entry »
March 17, 2016
(by Catherine Waddams) In its provisional decision on remedies for the Energy Market, the Competition and Markets Authority measures weak customer response by the amount of money which is ‘left on the table’ by customers who do not switch to cheaper tariffs. However, research at the Centre for Competition Policy shows that understanding such inertia is complex, and that consumers differ considerably in their propensity to change suppliers. This variation is found even among comparatively well informed respondents who are aware of potential gains and the time it might take them to search for and switch to a better deal, and even after accounting for observable demographic and other factors, and for consumer expectations. This matters both for designing an effective package of remedies and, in due course, for evaluating their success. Why? Read the rest of this entry »
March 14, 2016
(by Catherine Waddams) The Competition and Markets Authority (CMA) has argued that competition is the way to empower most energy customers, but that prepayment users need additional protection. The compromise highlights the tension between competition and protection, because although competition is often the best way to ensure the lowest average prices and highest service quality for consumers on average, it is a process which carries no guarantees about the outcomes, nor about which particular customers and providers may win and lose from the process. Read the rest of this entry »
March 11, 2016
(By Dr David Deller) Yesterday the CMA published its widely anticipated provisional remedies to its long-running energy market investigation. Overall there is a significant gap between the size of detriment claimed by the CMA and the scale of the provisional remedies proposed by the CMA. It is this inconsistency which is at the heart of a dissenting view regarding the provisional decision expressed by one of the decision makers. Beyond highlighting this inconsistency, the purpose of this blog is twofold: to highlight the beneficial remedies; and to raise outstanding questions that the CMA should address in its final decision and report. While the proposed remedies have limited downside risks, they are also unlikely to reset the market for the majority of consumers. A lot hangs on the (probably questionable) assumption that smart meters will solve the competition questions. Read the rest of this entry »