Who Pays a Price on Carbon?

Grainger, Corbett; Kolstad, Charles D.

doi:10.1007/s10640-010-9345-x

“…An important literature in public finance studies the incidence of carbon taxes and energy prices, typically by using general equilibrium models based on input-output matrices and detailed expenditure data (Bovenberg and Goulder, 2001;Fullerton and Heutel, 2007;Hassett, Mathur, and Metcalf, 2009;Grainger and Kolstad, 2010;Fullerton and Heutel, 2010;Williams, Gordon, Burtraw, Carbone, and Morgenstern, 2014). These studies generally assume that firms engage in perfect competition and that the industry supply curve is infinitely elastic, which implies complete pass-through of energy input price changes to consumers.…”

Section: Introductionmentioning

confidence: 99%

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

Ganapati¹,

Shapiro²,

Walker³

2016

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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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“…Fullerton (2008) and Parry et al (2005) provide a review of previous works, and identify the economic channels through which the personal income distribution may be affected. 3 For several OECD countries, studies such as Pearson and Smith (1991), Casler and Rafiqui (1993), Brannlund and Nordstrom (2004), Wier et al (2005), Scott and Eakins (2004), Callan et al (2008), and Grainger and Kolstad (2009) have assessed the redistributive impacts of aforementioned environmental taxes. The general finding is that such taxes have mildly regressive distributional effects which can further be alleviated by revenue recycling, e.g.…”

Section: Introductionmentioning

confidence: 99%

On the redistributive effects of Germany’s feed-in tariff

Grösche

¹

,

Schröder

²

2013

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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. Abstract. The present article assesses the redistributive effects of a key element of German climate change policy, the promotion of renewables in the electricity mix through the provision of a feed-in tariff. The tariff shapes the distribution of households' disposable incomes by charging a levy that is proportional to household electricity consumption, and by financial transfers channeled to households feeding green electricity into the grid. Our study builds on representative household survey data, providing information on various socio demographics, household electricity consumption and ownership of solar facilities. The redistributive effects of the feed-in tariff are evaluated by means of various inequality indices. All the inequality measures indicate that Germany's feed-in tariff is mildly regressive. Terms of use: Documents in EconStor may

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“…The empirical literature has confirmed this presumption for environmental taxes (Parry (2004); Metcalf (1999); Hassett et al (2009);Grainger and Kolstad (2010)). The driving force behind the distributional impact of a carbon tax seem to be fuel and electricity use (Hassett et al (2009)), or more precisely the fact that polluting goods are mostly energy intensive and account for a large share of the budget spend by low income households (Grainger and Kolstad (2010)). Metcalf (1999) suggests targeted tax cuts to make the policy distributionally neutral.…”

mentioning

confidence: 88%

Wind Electricity Subsidies = Windfall Gains for Land Owners? Evidence from Feed-In Tariff in Germany

Haan

¹

,

Simmler

²

2016

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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. Terms of use: Documents in AbstractIn 2013, around 121 billion US-Dollar were spend worldwide to promote the investment into renewable energy sources. The most prominent support scheme employed is a feed-in tariff, which guarantees a fixed price for electricity produced by renewable energies sources, usually for around 15 years after the installation of the plant. We study the incidence of wind turbine subsidies, due to a feed-in tariff in Germany, into land prices to shed light on who benefits from the subsidies. In order to identify the incidence share we exploit quasi-experimental variation in wind strength across 270 non-urban counties combined with an institutional reform and use an Instrumental Variable estimator based on administrative transaction prices. We find that between 15 and 20% of expected wind turbine profits are capitalized into land prices. Using the estimated incidence share of 15%, we find that wind turbine subsidies account for roughly 4% of overall agricultural income of land owners in 2007.JEL Classification: H22, H23, H25, Q28, Q42.

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Who Pays a Price on Carbon?

Cited by 221 publications

References 24 publications

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

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

On the redistributive effects of Germany’s feed-in tariff

Wind Electricity Subsidies = Windfall Gains for Land Owners? Evidence from Feed-In Tariff in Germany

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