How vulnerable are small firms to energy price increases? Evidence from Mexico
Bibliographic Data
| ID | 21691035 |
|---|---|
| Authors | Hannes Greve (0000-0002-5027-7169, German Institute for Global and Area Studies, corresponding author), Jotham Lay (0000-0002-0784-3807, German Institute for Global and Area Studies), Jann Lay, Ana Negrete (Universidad de Guanajuato) |
| Year | 2023 |
| Volume | 28 |
| Issue | 1 |
| Pages | 89-109 |
| Publication date | 2023-02-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Environment and Development Economics (JOURNAL) |
| Journal identifiers | ISSN: 1355-770X • E-ISSN: 1469-4395 |
| Publisher | Cambridge University Press (CUP) (PUBLISHER) |
| DOI | 10.1017/s1355770x22000080 |
| OpenAlex | W4285389061 |
| Language | EN |
| Citations received | 3 |
| References cited | 20 |
The vulnerability of small firms to price shocks may partly explain why fossil fuel subsidy removals in developing countries are so difficult to implement. This paper analyzes the effects of fuel and electricity price increases on profits of micro- and small-sized enterprises in Mexico. Using representative cross-sectional data, simulations of profit losses hint at potentially large short-term effects. First-order profit losses of a 1 per cent price increase are 0.2 per cent for fuels and 0.07 per cent for electricity, but are higher than 1 per cent for fuels in the transport sector. These effects are larger for formal than for informal firms, with energy-using low-profit firms being most vulnerable. Second-order impacts – predicted using estimated input-demand elasticities – indicate that firms react to price shocks by substituting labor for energy, while the self-employed appear to increase their own labor input. Reduced-form regressions show that some firms pass on higher fuel costs to customers
Business · Developing country · Economic growth · Economics · Electricity · Electricity price · Fossil fuel · Market economy · Microeconomics · Monetary economics · Natural resource economics · Profit margin · Renewable energy · Subsidy · Energy and Environment Impacts · Energy, Environment, and Transportation Policies · Energy, Environment, Economic Growth · Finance
Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing
Energy taxation, subsidy removal and poverty in Mexico
Electricity Cost and Firm Performance
Technology, Prices, and the Derived Demand for Energy
The impact of blackouts on the performance of micro and small enterprises
Constrained Gazelles
| Unique citing works | 3 |
|---|---|
| Citations per year | 3 |
| Citation span | 2025 - 2026 (2) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 3 |