Energy Cost Pass-Through in US Manufacturing: Estimates and Implications for Carbon Taxes

Sharat Ganapati, Joseph Shapiro and Reed Walker

American Economic Journal: Applied Economics, 2020, vol. 12, issue 2, 303-42

Abstract: We study how changes in energy input costs for US manufacturers affect the relative welfare of manufacturing producers and consumers (i.e., incidence). We also develop a methodology to estimate the incidence of input taxes that accounts for incomplete pass-through, imperfect competition, and substitution among inputs. For the several industries we study, 70 percent of energy price-driven changes in input costs get passed through to consumers in the short to medium run. The share of the welfare cost that consumers bear is 25–75 percent smaller (and the share producers bear is larger) than models featuring complete pass-through and perfect competition would suggest.

JEL-codes: H22 H23 L60 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (54)

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Related works:
Working Paper: Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes (2020)
Working Paper: Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes (2016)
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DOI: 10.1257/app.20180474

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