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Electricity pricing in a partial reformed plan system: The case of China

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  • Zhang, Liang

Abstract

Despite three decades of reform, the electric power industry in China is still organised by a partial reformed plan system, where the investment to build capacity has been liberalised, but the prices and the production remain controlled by the state. This paper examines the pricing behaviour of the power supply in China, where the state attempts to balance the interest between the public and the electric power industry. The empirical evidence shows that the cost factors are critical to the electricity pricing in China, and that the bargaining mechanism, which sets the plan price, allows the power producers to face a soft budget constraint on their own costs.

Suggested Citation

  • Zhang, Liang, 2012. "Electricity pricing in a partial reformed plan system: The case of China," Energy Policy, Elsevier, vol. 43(C), pages 214-225.
    • Handle: RePEc:eee:enepol:v:43:y:2012:i:c:p:214-225
    DOI: 10.1016/j.enpol.2011.12.058
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    References listed on IDEAS

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    1. Lam, Pun-Lee, 2004. "Pricing of electricity in China," Energy, Elsevier, vol. 29(2), pages 287-300.
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    4. repec:hal:wpspec:info:hdl:2441/7069 is not listed on IDEAS
    5. John F. Stewart, 1979. "Plant Size, Plant Factor, and the Shape of the Average Cost Function in Electric Power Generation: A Nonhomogeneous Capital Approach," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 549-565, Autumn.
    6. repec:bla:ecorec:v:65:y:1989:i:191:p:329-44 is not listed on IDEAS
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    Cited by:

    1. Bertrand Rioux, Philipp Galkin, Frederic Murphy, and Axel Pierru, 2017. "How do Price Caps in Chinas Electricity Sector Impact the Economics of Coal, Power and Wind? Potential Gains from Reforms," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    2. Zhang, Liang & Ruan, Jian & Ding, Jianhua, 2014. "The institutional power shortage in China: Capacity shortage or capacity under-utilisation?," Applied Energy, Elsevier, vol. 136(C), pages 480-494.
    3. Lin, Boqiang & Du, Zhili, 2017. "Promoting energy conservation in China's metallurgy industry," Energy Policy, Elsevier, vol. 104(C), pages 285-294.
    4. Lin, Boqiang & Ouyang, Xiaoling, 2014. "Electricity demand and conservation potential in the Chinese nonmetallic mineral products industry," Energy Policy, Elsevier, vol. 68(C), pages 243-253.
    5. Lin, Boqiang & Zhang, Guoliang, 2013. "Estimates of electricity saving potential in Chinese nonferrous metals industry," Energy Policy, Elsevier, vol. 60(C), pages 558-568.

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