IDEAS home Printed from https://ideas.repec.org/p/cdl/agrebk/qt2bx8q3xr.html
   My bibliography  Save this paper

Efficient market versus regulatory capture: a political economy assessment of power market reform in China

Author

Listed:
  • Lin, Jiang Dr.
  • Xiang, Chenxi Ms

Abstract

China began implementing market-based economic dispatch through power sector reform in 2015, but the reform has encountered some political and economic challenges. This paper identifies the reform’s efficiency changes and explores and quantifies the influences of market-driven and politically driven mechanisms behind these changes, employing a partial market equilibrium model integrating high-frequency data in southern China. We found that the dispatch transition improves the overall efficiency, but regulatory capture in provincial markets limits its full potential. The preference for local enterprises over central state-owned enterprises (SOEs) by local governments, in the form of allocated generation quotas, demonstrates the political challenge for market reform. The allocated generation quota protects small coal-fired and natural gas generators owned by local SOEs, lessening their motivation to improve generation efficiency, even after the reform. As a result, nearly half of the potential carbon dioxide emission reduction and social welfare gains through market reform is not realized.

Suggested Citation

  • Lin, Jiang Dr. & Xiang, Chenxi Ms, 2022. "Efficient market versus regulatory capture: a political economy assessment of power market reform in China," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2bx8q3xr, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt2bx8q3xr
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/2bx8q3xr.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Social and Behavioral Sciences; Economic dispatch; electricity market; Regulatory capture; Efficiency gains; China;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt2bx8q3xr. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/dabrkus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.