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Effects of deregulation and vertical unbundling on the performance of China's electricity generation sector

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  • Hang GAO
  • Jo VAN BIESEBROECK

Abstract

We study whether the 2002 deregulation and vertical unbundling of the Chinese electricity sector has boosted productivity in the generation segment of the industry. Controlling explicitly for sources of price-heterogeneity across firms and for firm-fixed effects, we find deregulation to be associated with a reduction in labor input and material use of 6 and 4 percent, respectively. This effect only appears two years after the reforms, is robust to alternative ways of identifying restructured firms, and to the nonrandom selection of restructured firms using a matching estimator. Input use of new state-owned firms that start operations two years into the reform period does not differ significantly anymore from input use of private sector entrants.

Suggested Citation

  • Hang GAO & Jo VAN BIESEBROECK, 2011. "Effects of deregulation and vertical unbundling on the performance of China's electricity generation sector," Working Papers Department of Economics ces11.30, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces11.30
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    References listed on IDEAS

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    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.
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    Citations

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    Cited by:

    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. Sun, Chuanwang, 2015. "An empirical case study about the reform of tiered pricing for household electricity in China," Applied Energy, Elsevier, pages 383-389.
    3. Du, Limin & Mao, Jie, 2015. "Estimating the environmental efficiency and marginal CO2 abatement cost of coal-fired power plants in China," Energy Policy, Elsevier, vol. 85(C), pages 347-356.
    4. repec:eee:eecrev:v:98:y:2017:i:c:p:373-391 is not listed on IDEAS
    5. Stefan Seifert, 2015. "Measuring Productivity When Technologies Are Heterogeneous: A Semi-Parametric Approach for Electricity Generation," Discussion Papers of DIW Berlin 1526, DIW Berlin, German Institute for Economic Research.
    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. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2014. "Challenges of working with the Chinese NBS firm-level data," China Economic Review, Elsevier, vol. 30(C), pages 339-352.
    8. Daisy Shen & Qing Yang, . "Electricity Market Regulatory Reform and Competition – Case Study of the New Zealand Electricity Market," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    9. Lin, Boqiang & Du, Kerui, 2015. "Energy and CO2 emissions performance in China's regional economies: Do market-oriented reforms matter?," Energy Policy, Elsevier, vol. 78(C), pages 113-124.
    10. Carlo Cambini & Federico Caviggioli & Giuseppe Scellato, 2015. "R&D, Patenting and Market Regulation: Evidence from EU Electricity industry," IEFE Working Papers 78, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    11. Du, Limin & Hanley, Aoife & Rehdanz, Katrin, 2014. "China's CO2 emissions from power generating stations: A first exploration," Kiel Working Papers 1934, Kiel Institute for the World Economy (IfW).

    More about this item

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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