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The Distributional Effects of Temperature Changes: Evidence from China’s Cement Industry

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  • Chunhua Wang

    (Shanghai Jiao Tong University)

Abstract

The distributional effects of climate change are important, yet understudied. Using a panel of firm-level data on the cement industry and plausibly exogenous variation in temperature within counties in China, this article investigates how producers and consumers split the economic cost of high temperatures. The results suggest that extremely high temperatures reduce TFP and increase the marginal cost of cement production. However, there is an incomplete pass-through of the increased cost to consumers in the form of higher product price. Relative to a day with a mean temperature between 12–15°C, an additional day with a temperature exceeding 30°C can increase the price by approximately 0.22%. On average, consumers bear more than 50% of the cost burden associated with high temperatures.

Suggested Citation

  • Chunhua Wang, 2025. "The Distributional Effects of Temperature Changes: Evidence from China’s Cement Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(1), pages 163-184, January.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:1:d:10.1007_s10640-024-00926-2
    DOI: 10.1007/s10640-024-00926-2
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    More about this item

    Keywords

    Temperature; Distributional effect; Cost pass-through; Price; Incidence;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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