The Measurement Of The Performance Of China’s Electric Power Industry Reform

In the classic theories of industrial economics, electric power industry is a natural monopoly industry with significant network economies of scale. In general, the natural monopoly and the vertically integrated aspects of electricity production caused by the natural monopoly are the industrial organization characteristics of the power industry. Power industry, according to its production process can be divided into four stages of the generation, transmission, distribution, and sale of electricity. Under normal circumstances, one stage or multiple stages of production or service are provided by the enterprise that regulated by the government. However, regulatory failure will often result in low efficiency and high cost of the electricity industry. Since the mid-1980s, there is a wave of marketization and privatization, reform of the power industry worldwide. And since the1990s, our government has taken a series of reform measures to improve competitiveness and efficiency of the electricity industry.2002"separating the power generation and the power grid, bidding for the access to the grid" is the substantive starting point for reform of China’s electric power industry, so far the reform has been almost10years, separation of generation to the vertical integration of the electric power industry made it is divided into the competitive generation side and the transmission, distribution and the sale as one of the grid, this paper would like to apply relevant theory and econometric models to measure the performance of China’s electric power industry reform. Specifically, use the stochastic frontier analysis to measure the efficiency of the grid, and the effect of the reform of the grid evaluation. On this basis, we will give the proper evaluation to the reform of "separating the power generation and the power grid, bidding for the access to the grid"On the basis of technical efficiency theory and evaluation methods change, use the stochastic frontier analysis model to study the technical efficiency change of the power grid in China’s power industry and the factors that affect the technical efficiency.From the specific content, the paper is divided into five chapters. Chapter one is the introduction, proposes research background and research purposes of this paper, and introduces the research methods, ideas and innovation. The second chapter is a literature review. Divided into two parts, first is the introduction of network-based industries, introduces network externalities associated with this paper; then, the introduction of stochastic frontier analysis model (SFA). Chapter three is the reform process of China’s power industry over the years and its status quo. The fourth chapter is the main part of this paper, use the stochastic frontier analysis model (SFA) to measure the production efficiency of the grid before and after the reform of China’s electric power industry, and in order to come to the evaluation of China’s power industry reform and performance. Finally, chapter five, obtained the paper conclusion and the policy recommendations on the basis of in the above chapters.Based on earlier empirical researches on China’s electricity transmission networks, this paper uses5models related to the stochastic frontier analysis to measure the efficiency of China’s provincial electricity transmission networks, by adopting panel data of29provinces over15years from1994to2008. The estimation results show that although electricity transmission networks are administrative monopolized, there are very obviously characteristics of natural monopoly; the impact of network size on output is significant. The results also illustrate that the reform in2002is fruitful. However, the measure of efficiency shows the efficiency of China’s power transmission network is still very low, and there is still room for improvement.