Pass-Through of Own and Rival Cost Shocks: Evidence from the U.S. Fracking Boom

Abstract In imperfectly competitive settings, a firm's price depends on its own costs as well those of competitors. We demonstrate that this has important implications for the estimation and interpretation pass-through. Leveraging large input cost shock resulting from fracking boom, we isolate responses to firm-specific, regional, industry-wide shocks in U.S. oil refining industry. The pass-through these components varies near zero full pass-through, reconciling seemingly disparate results literature. illustrate policy rival context tax refinery carbon emissions.