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The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis

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  • Xie, Bai-Chen
  • Ni, Kang-Kang
  • O'Neill, Eoghan
  • Li, Hong-Zhou

Abstract

China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.

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  • Xie, Bai-Chen & Ni, Kang-Kang & O'Neill, Eoghan & Li, Hong-Zhou, 2021. "The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis," Utilities Policy, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:juipol:v:69:y:2021:i:c:s0957178721000217
    DOI: 10.1016/j.jup.2021.101187
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