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Comparison of misallocation between the Chinese thermal power and hydropower electricity industries

Chin-Hsien Yu, Jinsong Zhao, Ping Qin, Shinn-Shyr Wang and Wen-Chieh Lee

Economic Modelling, 2022, vol. 116, issue C

Abstract: This study investigates the efficiency of resource allocation in China's electricity industry. Using a plant-level dataset configured from the thermal and hydroelectric generation sources, we find resource misallocation in both types of electric generation sources. By further decomposing the source of misallocation, we reveal that compared with the hydropower industry, the thermal power industry suffered more from output distortions that reflect the staggering output prices of power plants. The 22.5%–38.3% thermal power total factor productivity gain occurred in both state- and nonstate-owned enterprises, resulting from the hypothetical energy structure improvement case, which also serves to assert the impact of the energy transition.

Keywords: Resource misallocation; Electricity; Thermal power sector; Hydroelectric sector; State-owned enterprises (search for similar items in EconPapers)
JEL-codes: E02 Q43 Q58 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.econmod.2022.106007

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