IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/10436.html

The Effects of Energy Prices on Firm Competitiveness : Evidence from Chile

Author

Listed:
  • Amann,Juergen
  • Grover,Arti Goswami

Abstract

This paper analyzes the impact of changes in energy prices on the competitiveness ofmanufacturing firms in Chile. Using the Chilean Annual National Industrial Survey data, the paper illustrates that,first, increases in energy prices generally do not hurt firm competitiveness. Second, the impact of energy prices dependson the fuel type—while electricity price increases are negatively correlated with firm outcomes, fossil fuel priceincreases have a positive association with investment and firm productivity, a result that is consistent with thestrong version of the Porter hypothesis. Third, these effects are heterogeneous and vary by firm attributes suchas size, ownership and location. Fourth, investigating non-linear patterns in firm outcomes based on the level ofenergy prices, the findings show that the positive correlation between fossil fuel price increases and capitalupgrading is particularly pronounced when energy prices are at relatively low levels.

Suggested Citation

  • Amann,Juergen & Grover,Arti Goswami, 2023. "The Effects of Energy Prices on Firm Competitiveness : Evidence from Chile," Policy Research Working Paper Series 10436, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10436
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/099507105082329730/pdf/IDU0a035eb5007d3a045d709c4f08d4a72bf5aee.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cansino, José M. & Sánchez-Braza, Antonio & Rodríguez-Arévalo, María L., 2018. "How can Chile move away from a high carbon economy?," Energy Economics, Elsevier, vol. 69(C), pages 350-366.
    2. Machado, José A.F. & Santos Silva, J.M.C., 2019. "Quantiles via moments," Journal of Econometrics, Elsevier, vol. 213(1), pages 145-173.
    3. Lin, Boqiang & Jiang, Zhujun, 2011. "Estimates of energy subsidies in China and impact of energy subsidy reform," Energy Economics, Elsevier, vol. 33(2), pages 273-283, March.
    4. William Robert Reed, 2015. "On the Practice of Lagging Variables to Avoid Simultaneity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(6), pages 897-905, December.
    5. Mitchell A. Petersen, 2009. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," The Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 435-480, January.
    6. Rentschler, Jun & Kornejew, Martin & Bazilian, Morgan, 2017. "Fossil fuel subsidy reforms and their impacts on firms," Energy Policy, Elsevier, vol. 108(C), pages 617-623.
    7. Calì, Massimiliano & Cantore, Nicola & Iacovone, Leonardo & Pereira-López, Mariana & Presidente, Giorgio, 2022. "Too much energy The perverse effect of low fuel prices on firms," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    8. Cameron, A. Colin & Gelbach, Jonah B. & Miller, Douglas L., 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 238-249.
    9. Jeffrey M. Wooldridge, 2005. "Fixed-Effects and Related Estimators for Correlated Random-Coefficient and Treatment-Effect Panel Data Models," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 385-390, May.
    10. Maruejols, Lucie & Höschle, Lisa & Yu, Xiaohua, 2022. "Vietnam between economic growth and ethnic divergence: A LASSO examination of income-mediated energy consumption," Energy Economics, Elsevier, vol. 114(C).
    11. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).
    12. Betz, Timm & Cook, Scott J. & Hollenbach, Florian M., 2018. "On the Use and Abuse of Spatial Instruments," Political Analysis, Cambridge University Press, vol. 26(4), pages 474-479, October.
    13. Daniel A. Ackerberg & Kevin Caves & Garth Frazer, 2015. "Identification Properties of Recent Production Function Estimators," Econometrica, Econometric Society, vol. 83, pages 2411-2451, November.
    14. Eugénie Joltreau & Katrin Sommerfeld, 2019. "Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature," Climate Policy, Taylor & Francis Journals, vol. 19(4), pages 453-471, April.
    15. Michael Jakob & Jan Christoph Steckel, 2014. "How climate change mitigation could harm development in poor countries," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 5(2), pages 161-168, March.
    16. Arlan Brucal & Antoine Dechezleprêtre, 2021. "Assessing the impact of energy prices on plant-level environmental and economic performance: Evidence from Indonesian manufacturers," OECD Environment Working Papers 170, OECD Publishing.
    17. Amann, Juergen & Cantore, Nicola & Calí, Massimiliano & Todorov, Valentin & Cheng, Charles Fang Chin, 2021. "Switching it up: The effect of energy price reforms in Oman," World Development, Elsevier, vol. 142(C).
    18. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    19. John C. Chao & Norman R. Swanson, 2005. "Consistent Estimation with a Large Number of Weak Instruments," Econometrica, Econometric Society, vol. 73(5), pages 1673-1692, September.
    20. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    21. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amann, Juergen & Cantore, Nicola & Calí, Massimiliano & Todorov, Valentin & Cheng, Charles Fang Chin, 2021. "Switching it up: The effect of energy price reforms in Oman," World Development, Elsevier, vol. 142(C).
    2. repec:ces:ceswps:_10944 is not listed on IDEAS
    3. Calì, Massimiliano & Cantore, Nicola & Marin, Giovanni & Mazzanti, Massimiliano & Nicolli, Francesco & Presidente, Giorgio, 2023. "Energy prices and the economic performance of firms in emerging countries," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 357-366.
    4. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    5. Gagliardi, Nicola & Grinza, Elena & Rycx, François, 2024. "The Productivity Impact of Global Warming: Firm-Level Evidence for Europe," GLO Discussion Paper Series 1485, Global Labor Organization (GLO).
    6. Tsiboe, Francis & Turner, Dylan, 2023. "The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture," Food Policy, Elsevier, vol. 119(C).
    7. Barrows, Geoffrey & Calel, Raphael & Jégard, Martin & Ollivier, Hélène, 2023. "Estimating the effects of regulation when treated and control firms compete: a new method with application to the EU ETS," LSE Research Online Documents on Economics 119261, London School of Economics and Political Science, LSE Library.
    8. Thanh Tam Nguyen-Huu & Khac Minh Nguyen & Quoc Tran-Nam, 2022. "The role of environmental practices and innovation in total factor productivity convergence -Evidence from small-and medium-sized manufacturing enterprises in Vietnam," Post-Print hal-04248191, HAL.
    9. Alan D. Crane & Andrew Koch, 2018. "Shareholder Litigation and Ownership Structure: Evidence from a Natural Experiment," Management Science, INFORMS, vol. 64(1), pages 5-23, January.
    10. Eugénie Joltreau, 2022. "Extended Producer Responsibility, Packaging Waste Reduction and Eco-design," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(3), pages 527-578, November.
    11. Beat Hintermann & Maja Žarković & Corrado Di Maria & Ulrich J. Wagner, 2020. "The Effect of Climate Policy on Productivity and Cost Pass-Through in the German Manufacturing Sector," CRC TR 224 Discussion Paper Series crctr224_2020_249, University of Bonn and University of Mannheim, Germany.
    12. Miria A. Pigato, 2019. "Fiscal Policies for Development and Climate Action," World Bank Publications - Books, The World Bank Group, number 31051, April.
    13. Filippini, Massimo & Geissmann, Thomas & Karplus, Valerie J. & Zhang, Da, 2020. "The productivity impacts of energy efficiency programs in developing countries: Evidence from iron and steel firms in China," China Economic Review, Elsevier, vol. 59(C).
    14. Calì, Massimiliano & Cantore, Nicola & Iacovone, Leonardo & Pereira-López, Mariana & Presidente, Giorgio, 2022. "Too much energy The perverse effect of low fuel prices on firms," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    15. Mandasari, Putriesti & Luckstead, Jeff, 2025. "Examining the nexus between exporting status and CO2 productivity in Indonesian agri-based manufacturing," Energy Economics, Elsevier, vol. 143(C).
    16. Amann, Juergen & Cantore, Nicola, 2025. "Energy Prices and Competitiveness in the Manufacturing Sector," MPRA Paper 127199, University Library of Munich, Germany.
    17. Hallegatte,Stephane & Mcisaac,Florent John & Dudu,Hasan & Jooste,Charl & Knudsen,Camilla & Beck,Hans Anand, 2023. "The Macroeconomic Implications of a Transition to Zero Net Emissions : A Modeling Framework," Policy Research Working Paper Series 10367, The World Bank.
    18. Claudia Buch & Catherine Koch & Michael Koetter, 2016. "Crises and rescues: liquidity transmission through international banks," BIS Working Papers 576, Bank for International Settlements.
    19. Yue Zhao & Difang Wan, 2018. "Institutional high frequency trading and price discovery: Evidence from an emerging commodity futures market," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 38(2), pages 243-270, February.
    20. Francis,David C. & Kubinec ,Robert, 2022. "Beyond Political Connections : A Measurement Model Approach to Estimating Firm-levelPolitical Influence in 41 Economies," Policy Research Working Paper Series 10119, The World Bank.
    21. Arne Henningsen & Guy Low & David Wuepper & Tobias Dalhaus & Hugo Storm & Dagim Belay & Stefan Hirsch, 2024. "Estimating Causal Effects with Observational Data: Guidelines for Agricultural and Applied Economists," IFRO Working Paper 2024/03, University of Copenhagen, Department of Food and Resource Economics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:10436. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.