Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector

36 Pages Posted: 4 Mar 2014

See all articles by Hang Gao

Hang Gao

KU Leuven

Johannes Van Biesebroeck

K.U.Leuven; Centre for Economic Policy Research (CEPR)

Date Written: March 2014

Abstract

The restructuring of the Chinese electricity sector in 2002 reshaped the market structure by vertically unbundling the dominant integrated firm and started the process of wholesale price liberalization. We estimate factor demands to study whether these reforms boosted productivity in the generation segment of the industry. Controlling explicitly for price‚Äźheterogeneity across firms and unobservable productivity shocks, we find that the reforms are associated with reductions in labor and material use of 7 and 5 per cent, respectively. These effects only appear two years after the reforms and are robust to many specification checks. The absolute magnitudes of the estimated restructuring effects vary in intuitive ways by location, firm size or age, and for different definitions of restructured firms.

Suggested Citation

Gao, Hang and Van Biesebroeck, Johannes, Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector (March 2014). The Journal of Industrial Economics, Vol. 62, Issue 1, pp. 41-76, 2014. Available at SSRN: https://ssrn.com/abstract=2404128 or http://dx.doi.org/10.1111/joie.12034

Hang Gao

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Johannes Van Biesebroeck

K.U.Leuven ( email )

Naamsestraat 69
B-3000 Leuven
Belgium
+3216326793 (Phone)
+3216326796 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/N07057/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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