Understanding the Performance of the Electric Power Industry in China

Guy Liu () and Liang Zhang ()
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Guy Liu: Economics and Finance, Brunel University, Uxbridge, United Kingdom
Liang Zhang: Economics and Finance, Brunel University, Uxbridge, United Kingdom

Asian Economic Papers, 2012, vol. 11, issue 2, 62-92

Abstract: Despite three decades of reform, China's electricity sector is still organized by a “new reformed plan” where capacity investment has been liberalized but prices and production remain controlled. This paper examines the impact of the current plan prices on end-users with reference to the OECD and how the plan price of electricity supply is formed. We argue that the plan price is set in an attempt to balance the interests of the public and the power industry. We find that China's industries do not pay a cheaper price for electricity than the West, and the plan price is formed through bargain between the firm and the state, which allows the firm to have a soft price constraint on its costs. © 2012 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Keywords: electricity supply; utility price regulation; pricing behavior; Chinese enterprise reform (search for similar items in EconPapers)
JEL-codes: L94 (search for similar items in EconPapers)
Date: 2012
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