An Empirical Study On Provincial Performance Disparity In China's Electricity Industry

In this paper, the performance of the electricity industry is the main subject. Through the panel data of 29 provinces in China from 1993 to 2009, and from three aspects of demand, supply and institution respectively, we studied the major factors which affect the performance of the electricity industry, and analyzed how all these factors affect the provincial performance disparity in electricity industry. We first used the fixed effects model and random effects model to estimate the function of the performance of the electricity industry, then we used the Blinder-Oaxaca decomposition to analyze the provincial performance disparity in the electricity industry, and examine that at which degree these factors that influence the performance of the electricity industry contribute to the performance disparities.For the current research ignored the institutional factor, we focused on the level of the market to see how it influence the performance of electricity industry. Through empirical study we answered how the market level affected the overall performance of the electricity industry, and the degree it affected the provincial performance disparity. This study is a useful supplement of the existing studies and a theoretical support for the next market-oriented reforms in the electricity industry. In addition, by examining the relative provincial performance disparity, and finding out the factors which led to this disparity could give a practical guidance to narrow the performance gap. Low-efficiency region are able to catch up with high-efficiency region according to the guidance. In summary, studying the performance disparity between provinces in China's electricity industry has important theoretical and practical significance.Basic framework of this paper is as follows: introduction is the overall design of this paper, we put forward the question to be explained and stated the significance of this study. The second part is a literature review. The third part described the current situation and analyzed the reform processes of China's electricity industry from the reform and opening up. The fourth part is the empirical study of the factors which impact the performance of China's electricity industry. The fifth part is on the basis of the regression results in the fourth part. It decomposed the provincial performance disparity in China's electricity industry, studied the portion that contributed by demand, supply and institutional factors respectively. The last part of the full text included a brief summary of the study and reached the conclusion: the demand factors is the most important factor that affect the provincial performance disparity in the electricity industry, supply factors and institutional factors are not significant. On the basis of this conclusion, we presented some policy recommendations to narrow the performance gap between provinces in the electricity industry, hoping to play a role in improving the performance of China's electricity industry and guiding the further reform.