Pass-Through as a Test for Market Power: An Application to Solar Subsidies

• 成果类型: Article
• 署名作者: Pless, Jacquelyn; van Benthem, Arthur A.
• 署名单位: Massachusetts Institute of Technology (MIT); University of Pennsylvania; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20170611
• 发表日期: 2019
• 页码: 367-401
• 关键词: tax incidence; oligopoly; taxation; prices; incentives; support; systems; demand; cost; cash

摘要

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.