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Understanding the Performance of the Electric Power Industry in China

Author

Listed:
  • Guy Liu

    (Economics and Finance, Brunel University, Uxbridge, United Kingdom)

  • Liang Zhang

    (Economics and Finance, Brunel University, Uxbridge, United Kingdom)

Abstract

Despite three decades of reform, China's electricity sector is still organized by a “new reformed plan” where capacity investment has been liberalized but prices and production remain controlled. This paper examines the impact of the current plan prices on end-users with reference to the OECD and how the plan price of electricity supply is formed. We argue that the plan price is set in an attempt to balance the interests of the public and the power industry. We find that China's industries do not pay a cheaper price for electricity than the West, and the plan price is formed through bargain between the firm and the state, which allows the firm to have a soft price constraint on its costs. © 2012 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Guy Liu & Liang Zhang, 2012. "Understanding the Performance of the Electric Power Industry in China," Asian Economic Papers, MIT Press, vol. 11(2), pages 62-92, Summer.
    • Handle: RePEc:tpr:asiaec:v:11:y:2012:i:2:p:62-92
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    Citations

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    Cited by:

    1. Eric Girardin & Guy Liu & Jinghai Zheng, 2014. "An introduction: the challenges of the Chinese electricity industry and its reform," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 12(4), pages 333-352, November.
    2. Guy Liu & Liang Zhang & Eric Girardin, 2014. "The Chinese electricity industry: supply capacity and its determinants with reference to OECD countries," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 12(4), pages 353-382, November.

    More about this item

    Keywords

    electricity supply; utility price regulation; pricing behavior; Chinese enterprise reform;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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