The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis

Bai-Chen Xie, Kang-Kang Ni, Eoghan O'Neill and Hong-Zhou Li

Utilities Policy, 2021, vol. 69, issue C

Abstract: China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.

Keywords: Power grid sector; Scale effect; Parametric malmquist index (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:69:y:2021:i:c:s0957178721000217

DOI: 10.1016/j.jup.2021.101187

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