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on Industrial Organization |
| By: | Christoph Graf; Frank A. Wolak |
| Abstract: | Producers in locational pricing markets have the ability to exercise market power by impacting the extent to which transport capacity constraints bind. We extend the single-location residual demand curve concept to a residual demand hypersurface that quantifies the impact of a supplier’s output change at one location on prices at all locations. This concept improves our ability to explain the offers suppliers submit in the Italian locational pricing electricity market and demonstrates why the locations of a firm’s generation capacity determines the size and direction of locational price changes associated with the divestment of a fixed amount of generation capacity. |
| JEL: | L10 L13 Q48 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34272 |
| By: | María Paula Álvarez Arboleda (Universidad de los Andes) |
| Abstract: | This paper investigates the role of consumer preferences in shaping the performance of manufacturing firms in Colombia. I use data from Colombian manufacturing firms between 2000 and 2012 to decompose the contribution of consumer preferences into those attributable to preferences for certain goods (horizontal differentiation) and for particular providers of those goods (vertical differentiation). Employing a model that integrates consumer demand, following a nested CES structure, with firm production, I use key demand parameters to decompose the variance of firm sales into technical efficiency, input costs, and vertical and horizontal differentiation. I find that vertical differentiation plays a dominant role in explaining sales variance (85.9%), while horizontal differentiation and technical efficiency contribute to a lesser extent (26.2% and 29.2%, respectively). These findings underscore the importance of consumer preferences in determining firm outcomes, showing that demand-driven factors, frequently subsumed in productivity measures, outweigh traditional supply-side drivers that explain firms’ performance. |
| Keywords: | size of manufacturing firms; quality; differentiation; productivity; preferences |
| JEL: | L25 L60 O47 D22 D24 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021544 |
| By: | Vojtech Sikl (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague); Zuzana Irsova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague); Peter Kudela (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague); Anna Kudelova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague) |
| Abstract: | This meta-analysis synthesizes 4, 521 elasticity estimates drawn from 413 studies to examine the presence of publication and endogeneity bias in the literature. We coded over 100 study-level variables to assess how electricity consumers respond to price changes. Our results show that electricity demand is price inelastic, with an average short-run elasticity of -0.231 and average long-run elasticity of -0.532. However, after correcting for publication bias, the short-run elasticity declines in magnitude to -0.116, while the long-run elasticity adjusts to -0.303. Using Bayesian model averaging, we explore substantial heterogeneity in elasticity estimates. Factors such as declining tariff structures, demographic characteristics, fuel usage controls, daylight hours, and citation frequency significantly affect reported elasticities. In contrast, variables related to average and marginal electricity prices and time-of-use tariffs contribute minimally to the observed variation. |
| Keywords: | meta-analysis, elasticity, price elasticity, electricity, heterogeneity, publication bias, consumer sensitivity |
| JEL: | D01 Q40 Q49 C11 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2025_17 |