Power Generation Companies' Economies Of Scale And Research On The Effect Of Horizontal Merger

With the gradual saturation of the electricity market, major power generation companies have taken place more and more Horizontal Merger relying on power existing assets. Horizontal Merger is an important way to grow the installed capacity. However, they does not fully take into account the problems with their firm size and economies of scale, when the power generation companies take place Horizontal Merger. It is not a necessarily correct view that the larger the firm's size the better. The power generation companies will make the best economic efficiency only in a more reasonable economic context.Based on the background, in the first place, this paper analyzes the economies of scale of the power generation companies in China. In the second place, the paper analyzes Horizontal Merger of the power generation companies. On the basis of the theory, the paper analyzes the economies of scale of electric companies and five power generation groups with DEA model, and then gets the status of the scale effect. If the power generation companies want to reach the situation of the economies of scale, the input factors also need to conserve and the output elements should be improved. The main reason for Horizontal Merger is the economies of scale. Based on the analysis of economies of scale of the power generation companies, the paper continued to study the effect of Horizontal Merger. The paper analyzes the effect of Horizontal Merger of electric companies through establishing a mathematical model based on factor analysis. Finally, this model is applied to an empirical case. The result shows that the electric companies occurred Horizontal Mergers have emerged in more substantial performance improvement. In addition, the margin of growth is bigger and bigger over time. The result also shows the effect of Horizontal Merger have occurred significant changes. So it is the correct decision that the electric companies choose Horizontal Merger to achieve higher performance and reach the situation of economies of scale.It is a good hope that this research can be helpful to explore a more rapid and solid way for our country's power generation business development. The paper also can be helpful to improve the market competitiveness and economic efficiency of the power generation companies, so that they can play an more important role on supporting our national economy.