Pass-Through as a Test for Market Power: An Application to Solar Subsidies
We formalize pass-through over-shifting as a simple yet underutilized test for market power. We apply this test in the market for solar energy. Specifically, we estimate the pass-through of solar subsidies to solar system prices using rich micro-level transaction and subsidy data from California. Bu...
| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
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American Economic Association
2021
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| Online Access: | https://hdl.handle.net/1721.1/130070 |
| _version_ | 1826205858928787456 |
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| author | Pless, Jacquelyn van Benthem, Arthur A. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Pless, Jacquelyn van Benthem, Arthur A. |
| author_sort | Pless, Jacquelyn |
| collection | MIT |
| description | We formalize pass-through over-shifting as a simple yet underutilized test for market power. We apply this test in the market for solar energy. Specifically, we estimate the pass-through of solar subsidies to solar system prices using rich micro-level transaction and subsidy data from California. Buyers of solar systems capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We conclude that solar markets are imperfectly competitive by ruling out alternative explanations for over-shifting and reinforce this conclusion with a test of solar demand curvature. This procedure can serve to detect market power beyond the solar market. |
| first_indexed | 2024-09-23T13:20:13Z |
| format | Article |
| id | mit-1721.1/130070 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T13:20:13Z |
| publishDate | 2021 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/1300702022-09-28T13:29:45Z Pass-Through as a Test for Market Power: An Application to Solar Subsidies Pless, Jacquelyn van Benthem, Arthur A. Sloan School of Management We formalize pass-through over-shifting as a simple yet underutilized test for market power. We apply this test in the market for solar energy. Specifically, we estimate the pass-through of solar subsidies to solar system prices using rich micro-level transaction and subsidy data from California. Buyers of solar systems capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We conclude that solar markets are imperfectly competitive by ruling out alternative explanations for over-shifting and reinforce this conclusion with a test of solar demand curvature. This procedure can serve to detect market power beyond the solar market. 2021-03-03T21:00:14Z 2021-03-03T21:00:14Z 2019-10 2021-03-02T13:40:59Z Article http://purl.org/eprint/type/JournalArticle 1945-7782 1945-7790 https://hdl.handle.net/1721.1/130070 Pless, Jacquelyn and Arthur A. van Benthem. "Pass-Through as a Test for Market Power: An Application to Solar Subsidies." AEJ: Applied Economics 11, 4 (October 2019): 367-401. en http://dx.doi.org/10.1257/app.20170611 AEJ: Applied Economics Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Pless, Jacquelyn van Benthem, Arthur A. Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title | Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title_full | Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title_fullStr | Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title_full_unstemmed | Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title_short | Pass-Through as a Test for Market Power: An Application to Solar Subsidies |
| title_sort | pass through as a test for market power an application to solar subsidies |
| url | https://hdl.handle.net/1721.1/130070 |
| work_keys_str_mv | AT plessjacquelyn passthroughasatestformarketpoweranapplicationtosolarsubsidies AT vanbenthemarthura passthroughasatestformarketpoweranapplicationtosolarsubsidies |