On the pass‐through rate of the Nutrition North Canada subsidy

Abstract We estimate the effect of Canada's Nutrition North subsidy using an appropriate econometric strategy that accounts for heterogeneous effects across different market structures. This strategy leads to economically and statistically different estimates of the pass‐through rate than previous estimates. We find evidence that, on average, subsidy increases are fully passed on to the intended recipients. Our findings have important policy implications for addressing the high price of food in northern and remote communities, especially when compared to previous estimates that suggest a large portion of the subsidy fails to reach consumers.