IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v40y2013icp474-483.html
   My bibliography  Save this article

Deregulation, vertical unbundling and the performance of China's large coal-fired power plants

Author

Listed:
  • Zhao, Xiaoli
  • Ma, Chunbo

Abstract

In 2003, China's integrated electricity utility – the State Power Corporation (SPC) – was unbundled and dismantled into five generation groups and two grid companies in an effort to increase competition and improve efficiency. In this paper, we study the impact of this deregulation reform on the operational efficiency for a balanced panel of 34 large power plants for the period 1997–2010. We find that on average these power plants have converged to the technological frontier over the sample period. Controlling for substantial heterogeneity in the technical profile, we also find that the unbundling reform has boosted productivity of China's large thermal power plants; however, the presumably differential impacts of the reform on the previously SPC-managed power plants and the independent power producers in our sample are insignificant.

Suggested Citation

  • Zhao, Xiaoli & Ma, Chunbo, 2013. "Deregulation, vertical unbundling and the performance of China's large coal-fired power plants," Energy Economics, Elsevier, vol. 40(C), pages 474-483.
    • Handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:474-483
    DOI: 10.1016/j.eneco.2013.08.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S014098831300176X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2013.08.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hattori, Toru & Tsutsui, Miki, 2004. "Economic impact of regulatory reforms in the electricity supply industry: a panel data analysis for OECD countries," Energy Policy, Elsevier, vol. 32(6), pages 823-832, April.
    2. Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
    3. Du, Limin & Mao, Jie & Shi, Jinchuan, 2009. "Assessing the impact of regulatory reforms on China's electricity generation industry," Energy Policy, Elsevier, vol. 37(2), pages 712-720, February.
    4. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    5. Leopold Simar & Valentin Zelenyuk, 2006. "On Testing Equality of Distributions of Technical Efficiency Scores," Econometric Reviews, Taylor & Francis Journals, vol. 25(4), pages 497-522.
    6. Yang, Hongliang & Pollitt, Michael, 2009. "Incorporating both undesirable outputs and uncontrollable variables into DEA: The performance of Chinese coal-fired power plants," European Journal of Operational Research, Elsevier, vol. 197(3), pages 1095-1105, September.
    7. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-723, August.
    8. Joskow, Paul L & Schmalensee, Richard, 1987. "The Performance of Coal-Burning Electric Generating Units in the United States: 1960-1980," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 2(2), pages 85-109, April.
    9. L. Dean Hiebert, 2002. "The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 935-946, April.
    10. Hughes, Andrew & Yaisawarng, Suthathip, 2004. "Sensitivity and dimensionality tests of DEA efficiency scores," European Journal of Operational Research, Elsevier, vol. 154(2), pages 410-422, April.
    11. Daniel J. Henderson & Valentin Zelenyuk, 2007. "Testing for (Efficiency) Catching-up," Southern Economic Journal, John Wiley & Sons, vol. 73(4), pages 1003-1019, April.
    12. Michael Maloney, 2001. "Economies and Diseconomies: Estimating Electricity Cost Functions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(2), pages 165-180, September.
    13. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    14. Sueyoshi, Toshiyuki & Goto, Mika, 2011. "DEA approach for unified efficiency measurement: Assessment of Japanese fossil fuel power generation," Energy Economics, Elsevier, vol. 33(2), pages 292-303, March.
    15. Ma, Chunbo & He, Lining, 2008. "From state monopoly to renewable portfolio: Restructuring China's electric utility," Energy Policy, Elsevier, vol. 36(5), pages 1697-1711, May.
    16. Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
    17. Nagayama, Hiroaki, 2007. "Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries," Energy Policy, Elsevier, vol. 35(6), pages 3440-3462, June.
    18. Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
    19. Bernstein, Mark A. & Feldman, Stephen L. & Schinnar, Arie P., 1990. "Impact of pollution controls on the productivity of coal-fired power plants," Energy Economics, Elsevier, vol. 12(1), pages 11-17, January.
    20. David M. Newbery & Michael G. Pollitt, 1997. "The Restructuring and Privatisation of Britain's CEGB—Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
    21. Yaisawarng, Suthathip & Klein, J Douglass, 1994. "The Effects of Sulfur Dioxide Controls on Productivity Change in the U.S. Electric Power Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 447-460, August.
    22. Zhou, P. & Ang, B.W. & Wang, H., 2012. "Energy and CO2 emission performance in electricity generation: A non-radial directional distance function approach," European Journal of Operational Research, Elsevier, vol. 221(3), pages 625-635.
    23. Hailu, Atakelty & Veeman, Terrence S., 2001. "Alternative methods for environmentally adjusted productivity analysis," Agricultural Economics, Blackwell, vol. 25(2-3), pages 211-218, September.
    24. Faye Steiner, 2000. "Regulation, Industry Structure and Performance in the Electricity Supply Industry," OECD Economics Department Working Papers 238, OECD Publishing.
    25. Pun-Lee Lam & Alice Shiu, 2004. "Efficiency and Productivity of China's Thermal Power Generation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(1), pages 73-93, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ma, Chunbo & Zhao, Xiaoli, 2015. "China's electricity market restructuring and technology mandates: Plant-level evidence for changing operational efficiency," Energy Economics, Elsevier, vol. 47(C), pages 227-237.
    2. Ghosh, Ranjan & Kathuria, Vinish, 2016. "The effect of regulatory governance on efficiency of thermal power generation in India: A stochastic frontier analysis," Energy Policy, Elsevier, vol. 89(C), pages 11-24.
    3. See, Kok Fong & Coelli, Tim, 2012. "An analysis of factors that influence the technical efficiency of Malaysian thermal power plants," Energy Economics, Elsevier, vol. 34(3), pages 677-685.
    4. Chen, Zhongfei & Barros, Carlos Pestana & Borges, Maria Rosa, 2015. "A Bayesian stochastic frontier analysis of Chinese fossil-fuel electricity generation companies," Energy Economics, Elsevier, vol. 48(C), pages 136-144.
    5. Hang Gao & Johannes Van Biesebroeck, 2014. "Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 41-76, March.
    6. Du, Limin & He, Yanan & Yan, Jianye, 2013. "The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 804-812.
    7. Triebs, Thomas P. & Pollitt, Michael G., 2019. "Objectives and incentives: Evidence from the privatization of Great Britain’s power plants," International Journal of Industrial Organization, Elsevier, vol. 65(C), pages 1-29.
    8. Gómez-Calvet, Roberto & Conesa, David & Gómez-Calvet, Ana Rosa & Tortosa-Ausina, Emili, 2014. "Energy efficiency in the European Union: What can be learned from the joint application of directional distance functions and slacks-based measures?," Applied Energy, Elsevier, vol. 132(C), pages 137-154.
    9. Schober, Dominik, 2013. "Static vs. dynamic impacts of unbundling: Electricity markets in South America," ZEW Discussion Papers 13-033, ZEW - Leibniz Centre for European Economic Research.
    10. Erdogdu, Erkan, 2010. "Electricity Market Reform: Lessons for developing countries," MPRA Paper 27317, University Library of Munich, Germany.
    11. De Nicola, Arianna & Gitto, Simone & Mancuso, Paolo, 2011. "A two-stage DEA model to evaluate the efficiency of the Italian health system," MPRA Paper 39126, University Library of Munich, Germany.
    12. Renjie Yu & Peng Yuan & Fandi Yang & Gongxiong Jiang, 2023. "Effects of Vertical Unbundling on the Operational and Environmental Efficiency of Chinese Thermal Power Firms," Energies, MDPI, vol. 16(21), pages 1-22, October.
    13. Zhang, Ning & Jiang, Xue-Feng, 2019. "The effect of environmental policy on Chinese firm's green productivity and shadow price: A metafrontier input distance function approach," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 129-136.
    14. Mou, Dunguo, 2014. "Understanding China’s electricity market reform from the perspective of the coal-fired power disparity," Energy Policy, Elsevier, vol. 74(C), pages 224-234.
    15. Hou, Zheng & Roseta-Palma, Catarina & Ramalho, Joaquim J.S., 2024. "Can operational efficiency in the Portuguese electricity sector be improved? Yes, but..," Energy Policy, Elsevier, vol. 190(C).
    16. Halkos, George & Tzeremes, Nickolaos, 2011. "A conditional full frontier approach for investigating the Averch-Johnson effect," MPRA Paper 35491, University Library of Munich, Germany.
    17. Valentin Zelenyuk, 2019. "Data Envelopment Analysis and Business Analytics: The Big Data Challenges and Some Solutions," CEPA Working Papers Series WP072019, School of Economics, University of Queensland, Australia.
    18. Madhu Khanna & Surender Kumar, 2011. "Corporate Environmental Management and Environmental Efficiency," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 227-242, October.
    19. Gounopoulos, Dimitrios & Kallias, Konstantinos & Newton, David & Tzeremes, Nickolaos, 2016. "Political connections and IPO underpricing: An efficiency problem," MPRA Paper 69427, University Library of Munich, Germany.
    20. Hampf, Benjamin & Rødseth, Kenneth Løvold, 2019. "Environmental efficiency measurement with heterogeneous input quality: A nonparametric analysis of U.S. power plants," Energy Economics, Elsevier, vol. 81(C), pages 610-625.

    More about this item

    Keywords

    Efficiency; Deregulation; China; Electricity reform;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:474-483. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.