Energy tax exemptions and industrial production Andreas Gerster and Stefan Lamp
By: Gerster, Andreas
.
Contributor(s): Lamp, Stefan.
Material type: 
ArticleSubject(s): EXENCIONES TRIBUTARIAS | IMPUESTO SOBRE EL VALOR DE LA PRODUCCIÓN DE LA ENERGÍA ELÉCTRICA | MANUFACTURAS | OFERTA Y DEMANDA | ALEMANIA
In:
The Economic Journal v. 134, n. 663, October 2024, p. 2803-2834.Summary: This paper investigates the impact of a large electricity tax exemption on production levels, employment and input choices in the German manufacturing industry. For two policy designs, we show that exempted plants increase their electricity use. This effect is larger under a notched exemption policy, where passing an eligibility threshold yields infra-marginal benefits, compared to a policy without such benefits. We detect no significant impact of the exemptions on production levels, export shares and employment. Using counterfactual simulations, we document that notched policies substantially distort firms’ production input choices when financial stakes are high and compliance costs are low.
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| OP 282/2024/662-5 Spending and pricing to deter arbitrage | OP 282/2024/663 The Economic Journal | OP 282/2024/663-1 Price-cost margins, fixed costs and excess profits | OP 282/2024/663-2 Energy tax exemptions and industrial production | OP 282/2024/664 The Economic Journal | OP 282/2024/664-1 Using list prices to collude or to compete? | OP 282/2025/665 The Economic Journal |
Bibliografía
This paper investigates the impact of a large electricity tax exemption on production levels, employment and input choices in the German manufacturing industry. For two policy designs, we show that exempted plants increase their electricity use. This effect is larger under a notched exemption policy, where passing an eligibility threshold yields infra-marginal benefits, compared to a policy without such benefits. We detect no significant impact of the exemptions on production levels, export shares and employment. Using counterfactual simulations, we document that notched policies substantially distort firms’ production input choices when financial stakes are high and compliance costs are low.
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