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A short-run production function for electricity generation in China

Author

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  • Finn Førsund
  • Lennart Hjalmarsson
  • Jinghai Zheng

Abstract

Process industries, such as chemicals, aluminium, steel, pulp and paper, and thermal electricity generation, are important basic industries for economic growth in an economy such as the Chinese one. In order to promote improved efficiency and growth-inducing structural change, it is of paramount importance to model the development of such industries in a relevant way. It will then be necessary to go outside the smooth textbook production theory and turn to models incorporating typical features of process industries, such as embodied technical change, a sharp difference in substitution possibilities before and after investing, and a dynamic change at the industry level driven by entry and exit of plants and embodied technical change. The purpose of the paper is to give an introduction to the key production function concept of a short-run industry production function, and to show how this concept is the key to understanding industry dynamics. An empirical application is made on data for Chinese coal-fired electricity generation plants for one year. However, this will only be the first stage in a full-blown dynamic analysis. Combined cross-section and time-series data for plants are then required.

Suggested Citation

  • Finn Førsund & Lennart Hjalmarsson & Jinghai Zheng, 2011. "A short-run production function for electricity generation in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 9(2), pages 205-216.
    • Handle: RePEc:taf:jocebs:v:9:y:2011:i:2:p:205-216
    DOI: 10.1080/14765284.2011.568689
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    References listed on IDEAS

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    1. Forsund, Finn R & Hjalmarsson, Lennart, 1983. "Technical Progress and Structural Change in the Swedish Cement Industry 1955-1979," Econometrica, Econometric Society, vol. 51(5), pages 1449-1467, September.
    2. Hildenbrand, Werner, 1981. "Short-Run Production Functions Based on Microdata," Econometrica, Econometric Society, vol. 49(5), pages 1095-1125, September.
    3. repec:bla:scandj:v:85:y:1983:i:2:p:113-26 is not listed on IDEAS
    4. repec:bla:scandj:v:98:y:1996:i:3:p:365-86 is not listed on IDEAS
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    1. Førsund, Finn R. & Heshmati, Almas & Wang, Ke, 2018. "Dynamic Industry Productivity Measures: The case of thermal electricity generation by South Korean plants 2001-2008 and in Chinese regions 2000-2004," Memorandum 6/2018, Oslo University, Department of Economics.
    2. Finn R. Førsund & Ke Wang, 2020. "Measures of industry productivity change: the case of thermal electricity generation in Chinese provinces 2000–2014," Journal of Productivity Analysis, Springer, vol. 53(1), pages 37-52, February.
    3. Kristiaan Kerstens & Jafar Sadeghi & Ignace Woestyne & John Walden, 2024. "Short-run Johansen frontier-based industry models: methodological refinements and empirical illustration on fisheries," Journal of Productivity Analysis, Springer, vol. 61(1), pages 47-62, February.

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