How energy costs affect firms´ decisions

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What decisions do firms take in fluctuating energy costs situations? Data shows that higher energy costs are associated with lower exports. However, exporting firms are better able to adjust product prices, than non-trading firms, according to a new analysis.

In the aftermath of Russia´s invasion of Ukraine, energy prices soared, leaving many firms struggling. The National Board of Trade has analysed firm-level data between 2007 and 2021 to learn more about the relationship between energy prices and Swedish firms´ decisions.

“We find that exporting firms are better able to adjust product prices as a result of changes in energy costs, than non-trading firms”, says Erik Merkus, author of the analysis.

“This result warrants further attention, from both researchers and policymakers, as it could indicate a competitive advantage for firms engaged in international trade.”

Read the full interview and download the analysis

The Impact of Energy Costs on Trade and Production in Sweden