Pass‐through in a concentrated industry: empirical evidence and regulatory implications

Miller, Nathan; Osborne, Matthew; Sheu, Gloria

doi:10.1111/1756-2171.12168

Cited by 71 publications

(49 citation statements)

References 56 publications

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“…These analyses typically account for only one productive input (e.g., coal prices) which makes the methodology difficult to generalize to most manufacturing industries which use multiple factors of production and hence where marginal costs are more difficult to observe. For example, Miller, Osborne, and Sheu (2015) analyze the pass-through of energy costs in a single manufacturing industry -cement -though assume a single factor of production, which precludes factor substitution. In contrast to this existing literature, we develop an empirical methodology to measure incidence and pass-through for any industry in which we observe price data and where firms engage in cost minimizing behavior.…”

Section: Introductionmentioning

confidence: 99%

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

Ganapati¹,

Shapiro²,

Walker³

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. 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 sufficient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We find 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 find heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.JEL Classification: L11, H22, H23, Q40, Q54

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Section: Introductionmentioning

confidence: 99%

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

Ganapati¹,

Shapiro²,

Walker³

2016

SSRN Journal

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“…There are various economic studies of the cement industry which largely focus on investment behavior and environmental aspects (Salvo, 2010;Ryan, 2012;Miller et al, 2017;Perez-Saiz, 2015). More closely related is a study of the cement industry in the US Southwest from 1983 to 2003 by Miller and Osborne (2014).…”

Section: Related Literaturementioning

confidence: 99%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

et al. 2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. http://ftp.zew.de/pub/zew-docs/dp/dp17035.pdf Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar. Terms of use: Documents inDis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractWe study competition in markets with transport costs and capacity constraints.We compare the outcomes of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers who are closer to the competitor's plant. If firms compete, the transport distance varies in the degree of overcapacity, but not if they coordinate their sales. Using a rich micro-level data set of the cement industry in Germany, we study a cartel breakdown to identify the effect of competition on transport distances. Our econometric analyses confirm the theoretical predictions.JEL classification: K21, L11, L41, L61

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“…There are various economic studies of the cement industry which largely focus on investment behavior and environmental aspects (Salvo, 2010a;Ryan, 2012;Miller et al, 2017;Perez-Saiz, 2015). More closely related is a study of the cement industry in the US Southwest from 1983 to 2003 by Miller and Osborne (2014).…”

Section: Related Literaturementioning

confidence: 99%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

et al. 2017

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractWe study competition in markets with significant transport costs and capacity constraints. We compare the cases of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers that are closer to plants of competitors. By means of a rich micro-level data set of the cement industry in Germany, we provide empirical evidence in support of this result. Controlling for other potentially confounding factors, such as the number of production plants and demand, we find that the transport distances between suppliers and customers were on average significantly lower in cartel years than in non-cartel years.JEL classification: K21, L11, L41, L61

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Pass‐through in a concentrated industry: empirical evidence and regulatory implications

Cited by 71 publications

References 56 publications

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

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

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

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