Journal
CHINA ECONOMIC REVIEW
Volume 55, Issue -, Pages 99-110Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.chieco.2019.02.006
Keywords
Power grid efficiency; Service quality; Market power; Conditional SBM model
Categories
Funding
- National Natural Science Foundation of China [71874149, 71603148]
- Fujian Social Science Planning Fund Program [FJ2018B073]
- Open Fund of Operation and Control of Renewable Energy & Storage Systems [NYB51201801579]
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Since 1980s, China has experienced a series of reforms to support the development of electricity industry, and the latest one is in 2015. The essence of this new reform is to improve efficiency and lower energy cost. However, China's electricity market has its particularity. The provinces as entities is the main regulation frame in China's electricity sector. The operation of the electricity industry can be seen as a game result and interest compromise between the local government and grid companies, and this win-win exchange regulation failure leads to grid market power. The profit mode of the grid enterprises will be gradually changed with the deepening of new electricity reform. How to regulate electricity transmission and distribution sector and improve grid efficiency becomes a crucial problem to address. This paper aims to examine the relationship between market power and power grid efficiency. We calculate the unconditional and conditional efficiency of grid companies by applying a conditional slack-based measure (SBM) model. The empirical results show that grid efficiency is at a low level and the indicators differ among provinces and regions. Moreover, market power indeed has significant negative effects on power grid efficiency. These findings provide some insightful references for the future development of China's power industry and electricity reform.
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