The impacts of market power on power grid efficiency: Evidence from China
Ruting Huang and
China Economic Review, 2019, vol. 55, issue C, 99-110
Since 1980s, China has experienced a series of reforms to support the development of electricity industry, and the latest one is in 2015. The essence of this new reform is to improve efficiency and lower energy cost. However, China's electricity market has its particularity. The “provinces as entities” is the main regulation frame in China's electricity sector. The operation of the electricity industry can be seen as a game result and interest compromise between the local government and grid companies, and this “win-win exchange” regulation failure leads to grid market power. The profit mode of the grid enterprises will be gradually changed with the deepening of new electricity reform. How to regulate electricity transmission and distribution sector and improve grid efficiency becomes a crucial problem to address. This paper aims to examine the relationship between market power and power grid efficiency. We calculate the unconditional and conditional efficiency of grid companies by applying a conditional slack-based measure (SBM) model. The empirical results show that grid efficiency is at a low level and the indicators differ among provinces and regions. Moreover, market power indeed has significant negative effects on power grid efficiency. These findings provide some insightful references for the future development of China's power industry and electricity reform.
Keywords: Power grid efficiency; Service quality; Market power; Conditional SBM model (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:55:y:2019:i:c:p:99-110
Access Statistics for this article
China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu
More articles in China Economic Review from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().