ECONOMIC AND BEHAVIORAL FACTORS INFLUENCING ELECTRICITY, TELECOMMUNICATIONS AND DISCRETIONARY SERVICES PRICE SENSITIVITY AMONG HOUSEHOLDS IN BOSNIA AND HERZEGOVINA

This study examines household consumer reactions to proposed electricity tariff increases in Bosnia and Herzegovina. The Van Westendorp Price Sensitivity Meter was applied in a representative survey of electricity users to identify acceptable price ranges. The survey gathered price thresholds for potential rate changes, as well as data on service satisfaction, perceptions of fairness and demographic factors.

Results reveal that tolerance for higher electricity prices is extremely narrow. Electricity is an essential household good with inherently inelastic demand and consumers resist price hikes rooted in fairness concerns and distrust of utility providers. Consistent with international evidence, many respondents viewed tariff increases as symptoms of corruption or mismanagement. Stated willingness to pay was not found to increase with satisfaction; willingness to pay frequently failed to reflect satisfaction. Gender differences were observed, with female respondents less willing than men to accept surcharges for improved reliability.

By contrast, consumers show far greater price flexibility for non-essential services (e.g., telecommunications or entertainment subscriptions), underscoring electricity’s unique status in household budgeting. These findings carry direct policy implications. Electricity pricing reforms should address perceived unfairness and lack of trust. In line with established recommendations for tariff reform, the evidence suggests more open communication strategies and capacity-building within utilities to address consumer concerns and sustain public support.