Pass-Through of Own and Rival Cost Shocks: Evidence from the U.S. Fracking Boom

Erich Muehlegger and Richard Sweeney

No 24025, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In imperfectly competitive settings, a firm's price depends on its own costs as well as those of its competitors. We demonstrate that this has important implications for the estimation and interpretation of pass-through. Leveraging a large input cost shock resulting from the fracking boom, we isolate price responses to firm-specific, regional and industry-wide input cost shocks in the US oil refining industry. The pass-through of these components vary from near zero to full pass-through, reconciling seemingly disparate results from the literature. We illustrate the policy implications of rival cost pass-through in the context of a tax on refinery carbon emissions.

JEL-codes: H22 H23 Q40 Q54 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-com, nep-ene and nep-reg
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as Erich Muehlegger & Richard L. Sweeney, 2022. "Pass-Through of Own and Rival Cost Shocks: Evidence from the U.S. Fracking Boom," The Review of Economics and Statistics, vol 104(6), pages 1361-1369.

Downloads: (external link)
http://www.nber.org/papers/w24025.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24025

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24025

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().