Template-Type: ReDIF-Paper 1.0
Title: Heterogeneous Impacts of Cost Shocks, Strategic Bidding and Pass-Through: Evidence From the New England Electricity Market
Author-Name: Harim Kim
Author-Email: harimkim@uni-mannheim.de
Classification-JEL:
Keywords: 

Abstract: Industry-wide shocks can have heterogeneous impacts on firms’ costs due to different firm
characteristics. The heterogeneity in these impacts is crucial for understanding the passthrough of the shock, because of its implications on strategic competition. In the context
of the gas price shock in the electricity market, I develop a method to identify heterogeneous
impacts of the shock and show with a structural analysis that the heterogeneous feature of the
shock induces markup adjustments of firms. Pass-through that is estimated without incorporating heterogeneous impacts fails to reflect the change in competition arising from the shock,
and is, on average, underestimated.

Note: 
Length: 67
Creation-Date: 2018-11
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp053
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_053