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The mechanism of the power shortage in China: capacity shortage or capacity underutilisation?

Author

Listed:
  • Liang Zhang

    (Accounting School, SUIBE; Economics and Finance Department, Brunel University)

  • Jian Ruan

    (School of Brunel Engineering and Design, Brunel University)

  • Jianhua Ding

    (China Architecture Design & Research Group)

Abstract

This paper investigates the mechanism of the power shortage in China by estimating the capacity expansion and capacity utilisation behaviour of the power firms. The theoretical and empirical evidence is presented to show that the state planner deals with the ‘coal-electricity' conflict by internalising the coal price inflation in the power generation sector. This policy may distort the market signal of the capacity utilisation and lead to the power shortage even if the capacity supply is sufficient.

Suggested Citation

  • Liang Zhang & Jian Ruan & Jianhua Ding, 2013. "The mechanism of the power shortage in China: capacity shortage or capacity underutilisation?," Economics Bulletin, AccessEcon, vol. 33(4), pages 3050-3058.
    • Handle: RePEc:ebl:ecbull:eb-13-00714
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I4-P284.pdf
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    References listed on IDEAS

    as
    1. Zhao, Xiaoli & Lyon, Thomas P. & Song, Cui, 2012. "Lurching towards markets for power: China’s electricity policy 1985–2007," Applied Energy, Elsevier, vol. 94(C), pages 148-155.
    2. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    electricity price; power shortage; capacity utilisation; capacity expansion; coal-electricity conflict; China;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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