Postgraduate research opportunities

The loyalty penalty: impacts on consumers and policy responses

A three-year Economics PhD scholarship in collaboration with the Competition and Markets Authority (CMA) for candidates who wish to explore the loyalty penalty from an industrial organisation perspective.

Number of places

One

Opens

7 July 2020

Deadline

14 August 2020

Duration

36 months

Eligibility

Candidates are required to have:

  • a good first degree (at least 2:1), preferably with an economics or similar quantitative component
  • a Masters degree (or equivalent) in economics, with the expected completion date no later than September 2020
  • a strong interest in industrial organisation and the economics of competition, with a willingness to engage with multiple methods (e.g. data analysis; experiments) to approach research questions
  • a willingness to engage both with rigorous academic work and with realising the impact of research findings beyond the confines of academia
  • candidates who are not native English speakers will be required to provide evidence for their English skills (such as by IELTS or similar tests that are approved by UKVI, or a degree completed in an English speaking country)

Project Details

The loyalty penalty occurs in markets where consumers make repeat purchases on a periodic basis. Consumers who purchase repeatedly from the same firm without actively engaging with the market – loyal consumers – tend to end up paying a higher price for exactly the same product or service as new consumers. Markets that exhibit this loyalty penalty include insurance, energy, broadband and telephone, to which almost all consumers in the economy are exposed. A full understanding this practice and its consequences is of vital importance. The aim of this project is to understand the source of consumer behaviour that allows this loyalty penalty to exist, the impact it has on consumers across the distribution of consumer characteristics, and appropriate policy responses to protect the interests of consumers.

This issue is so prevalent that Citizens Advice launched a “super-complaint” in September 2018 (https://www.citizensadvice.org.uk/about-us/our-campaigns/all-our-current-campaigns/citizens-advice-super-complaint-on-the-loyalty-penalty/) compelling the CMA to undertake an investigation of the practice, the report on which, published in December 2018, usefully documents the extent to which firms engage in levying a loyalty penalty in different industries (https://www.gov.uk/cma-cases/loyalty-penalty-super-complaint). This investigation makes clear that this is a widespread issue that affects many markets, highlighting the importance of having a full understanding of the implications of the practice.

Funding Details

Fee waiver at Home/EU rate and annual stipend £15,009*

*Whilst open to International candidates, please note that this scholarship covers Home/EU/RUK Fee rate only.

How to apply

At this stage, we are inviting applicants to apply for the scholarship only. The successful candidate will then be asked to complete an application for PhD study at Strathclyde.

All applications should include:

  • cover letter indicating the candidate's relevant skills/experience and how they can contribute to this research
  • include the scholarship reference and project title in your cover letter
  • CV
  • transcripts and certificates of all degrees
  • proof of English language proficiency if English isn't your first language – IELTS minimum overall band score of 6.5 (no individual test score below 5.5)
  • two references (please refer to )

When sending the above documents please use the following file-naming convention: fullname_typeofdocument

  • Johnsmith_coverletter
  • Johnsmith_CV
  • Johnsmith_transcript1
  • Johnsmith_transcript2
  • Johnsmith_certificate1
  • Johnsmith_certificate2
  • Johnsmith_IELTS
  • Johnsmith_reference1
  • Johnsmith_reference2

Apply now by uploading your documents.

Please note: Candidates applying for this scholarship should ensure that they include the scholarship reference CMA2020 in their application for PhD Study within the Department of Economics.