Pass-Through as a Test for Market Power: An Application to Solar Subsidies

Pless, Jacquelyn; Benthem, Arthur van

doi:10.3386/w23260

Cited by 10 publications

(19 citation statements)

References 39 publications

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“…However, CSI records the date when a rebate application is electronically submitted, at which point a signed contract is required by program rules. The application might be submitted by either the homeowner or the contractor, but the subsidy is mainly captured by the homeowner (Pless and van Benthem, 2017). Because a rebate is reserved for the homeowner at the current rate upon submission, the homeowner has the incentive to submit as soon as possible.…”

Section: The California Solar Initiative (Csi)mentioning

confidence: 99%

Weather and the Decision to Go Solar: Evidence on Costly Cancellations

Liao¹

2020

Journal of the Association of Environmental and Resource Econom

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This paper studies the effect of short-run weather fluctuations on solar panel adoption in California. This decision appears to respond strongly to weather patterns associated with solar panel productivity: I find that customers whose sign-up for solar panels is followed by unfavorable weather are more likely to cancel their contracts. In contrast, non-residential customers are not subject to the same effect. Together, these results suggest that short-run weather conditions affect customers' valuation of solar panels. The most plausible mechanisms are psychological biases such as projection bias or a salience effect, leading the decision-maker to rely too heavily on transient conditions when predicting long-run utility. This paper is among the earliest to document evidence of behavioral anomalies in the solar market.

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Section: The California Solar Initiative (Csi)mentioning

confidence: 99%

Weather and the Decision to Go Solar: Evidence on Costly Cancellations

Liao¹

2020

Journal of the Association of Environmental and Resource Econom

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“…More generally, demand elasticity and demand convexity are (potentially location-specific) determinants of the pass-through (Weyl and Fabinger, 2013). Pless and van Benthem (2019) argue that under specific conditions, a passthrough rate above unity suggests the existence of market power.…”

Section: Theory and Empirical Literaturementioning

confidence: 97%

Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants

Ashenfelter

Jurajda

2021

SSRN Journal

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We use price and wage data from McDonald's restaurants to provide evidence on wage increases, labor-saving technology introduction, and price pass-through by a large low-wage employer facing a flurry of minimum wage hikes from 2016-2020. We estimate an elasticity of hourly wage rates with respect to minimum wages of 0.7. In 40% of instances where minimum wages increase, McDonald's restaurants' wages are near the effective minimum wage level both before and after its increase; however, we also uncover a tendency among a large subset of restaurants to preserve their pay 'premium' above the minimum wage level. We find no association between the adoption of labor-saving touch screen ordering technology and minimum wage hikes. Our data imply that McDonald's restaurants pass through the higher costs of minimum wage increases in the form of higher prices of the Big Mac sandwich. We find a 0.2 price elasticity with respect to wage increases, which implies an elasticity of prices with respect to minimum wages of about 0.14. Based on a listing of all US McDonald's restaurants from 2010 to 2020, we also find no effects of minimum wages on McDonald's restaurant entry and exit. Acknowledgments Our McDonald's survey was collected in phone interviews by ISA Corp under exemption #7779 granted by the Princeton University Institutional Review Board for Human Subjects. We would like to thank Daniel Aaronson, Barry Hirsch, Nikolas Mittag and participants at the (virtual) Memorial Conference celebrating Alan Krueger for their helpful comments. Marin Drlje provided excellent research assistance.

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“…There is likely imperfect competition at higher levels of the distribution chain and in retail markets in remote rural areas, and consumers of public health products are known to be sensitive to price. Third, empirical studies measuring pass-through in a variety of industries have found a range of pass-through rates, including pass-through exceeding 100% in some instances (Pless & van Benthem, 2019).…”

Section: Approaches For Measuring the Equity Of Private Sector Subsidiesmentioning

confidence: 99%

Does subsidizing the private for‐profit sector benefit the poor? Evidence from national antimalarial subsidies in Nigeria and Uganda

2021

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The private for-profit sector plays an important role in providing essential public health products in most developing countries (Grépin, 2016). Subsidization is a common approach for improving access in the private sector, and many public health products have been subsidized, including treatments for malaria, pneumonia, diarrhea, and sexually transmitted infections; water purification tablets; condoms; and bed-nets (Schäferhoff & Yamey, 2011;Taylor & Yadav, 2011).

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Pass-Through as a Test for Market Power: An Application to Solar Subsidies

Cited by 10 publications

References 39 publications

Weather and the Decision to Go Solar: Evidence on Costly Cancellations

Weather and the Decision to Go Solar: Evidence on Costly Cancellations

Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants

Does subsidizing the private for‐profit sector benefit the poor? Evidence from national antimalarial subsidies in Nigeria and Uganda

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