Replication data for: Pass-Through of Emissions Costs in Electricity Markets

Principal Investigator(s): View help for Principal Investigator(s) Natalia Fabra; Mar Reguant

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Project Citation:

Fabra, Natalia, and Reguant, Mar. Replication data for: Pass-Through of Emissions Costs in Electricity Markets. Nashville, TN: American Economic Association [publisher], 2014. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-11. https://doi.org/10.3886/E112855V1

Project Description

Summary: We measure the pass-through of emissions costs to electricity prices. We perform both reduced-form and structural estimations based on optimal bidding in this market. Using rich micro-level data, we estimate the channels affecting pass-through in a flexible manner, with minimal functional form assumptions. Contrary to many studies in the general pass-through literature, we find that emissions costs are almost fully passed-through to electricity prices. Since electricity is traded through high-frequency auctions for highly inelastic demand, firms have weak incentives to adjust markups after the cost shock. Furthermore, the costs of price adjustment are small.

Scope of Project

JEL Classification:
      D44 Auctions
      L11 Production, Pricing, and Market Structure; Size Distribution of Firms
      L94 Electric Utilities
      L98 Industry Studies: Utilities and Transportation: Government Policy
      Q52 Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
      Q54 Climate; Natural Disasters and Their Management; Global Warming

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V1 [2019-10-11]

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