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Economic and Efficiency Analysis of China Electricity Market Reform Using Computable General Equilibrium Model

Jieting Yin (), Qingyou Yan (), Kaijie Lei (), Tomas Baležentis () and Dalia Streimikiene ()
Additional contact information
Jieting Yin: School of Information, Beijing Wuzi University, Beijing 101149, China
Qingyou Yan: School of Economic and Management, North China Electric Power University, Beijing 102206, China
Kaijie Lei: DongGuan Power Supply Bureau, GuangDong Power Grid Corp., DongGuan 523008, China
Dalia Streimikiene: Lithuanian Institute of Agrarian Economics, Vilnius 01113, Lithuania

Sustainability, 2019, vol. 11, issue 2, 1-22

Abstract: China’s electricity industry has been undergoing a process of regulatory reform. This study aims to analyse the impact of liberalization on the electricity market assuming different degrees of scope of the reforms by applying a computable general equilibrium (CGE) model. In this paper, we consider the three sub-sectors of the electricity industry, namely generation, transmission and distribution. We assume that the reform will phase out the entry barriers on the generation side and allow for competition on the distribution side, while keeping the transmission side under regulation. The results showed that the reform could enhance efficiency in the electricity sector and reduce energy prices for households. Introduction of a complete competition model would decrease welfare by 5.394 billion yuan, if contrasted to a limited competition model. The composite energy price would decline under both scenarios, whereas the quantity of energy consumed by the households would go up. This research, thus, contributes to literature on the economic effects of China’s electric power market reform, and can be used as a case study to support policy decisions for the decision-makers.

Keywords: electricity market reform; computable general equilibrium (CGE) model; liberalisation; regulation; China (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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