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

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

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.

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  • Yu, Chin-Hsien & Zhao, Jinsong & Qin, Ping & Wang, Shinn-Shyr & Lee, Wen-Chieh, 2022. "Comparison of misallocation between the Chinese thermal power and hydropower electricity industries," Economic Modelling, Elsevier, vol. 116(C).
    • Handle: RePEc:eee:ecmode:v:116:y:2022:i:c:s0264999322002474
    DOI: 10.1016/j.econmod.2022.106007
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    More about this item

    Keywords

    Resource misallocation; Electricity; Thermal power sector; Hydroelectric sector; State-owned enterprises;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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