Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing*

Sharat Ganapati, Joseph Shapiro and Reed Walker

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are suffcient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We and that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups. This suggests that marginal cost pass-through is incomplete, with estimates centered around 0.7. Our confidence intervals reject both zero pass-through and complete pass-through. We and heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.

JEL-codes: H22 H23 L11 Q40 Q54 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2016-01
New Economics Papers: this item is included in nep-com, nep-ene and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www2.census.gov/ces/wp/2016/CES-WP-16-27.pdf First version, 2016 (application/pdf)

Related works:
Working Paper: Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing (2016)
Working Paper: Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:16-27

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