Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes

Sharat Ganapati, Joseph Shapiro and Reed Walker

No 22281, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how changes in energy input costs for U.S. 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 which accounts for incomplete pass-through, imperfect competition, and substitution amongst 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 L11 Q40 Q54 (search for similar items in EconPapers)
Date: 2016-05
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Published as Sharat Ganapati & Joseph S. Shapiro & Reed Walker, 2020. "Energy Cost Pass-Through in US Manufacturing: Estimates and Implications for Carbon Taxes," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 303-342, April.

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Journal Article: Energy Cost Pass-Through in US Manufacturing: Estimates and Implications for Carbon Taxes (2020)
Working Paper: Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes (2020)
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