| As an important basic industry of economic development, electric industry is required to offer high quality and steady power service at the cost of mass capital investments and energy consumption, which makes governmental regulation necessary. In the early 1990s, some developed countries implemented varieties of reforms concentrating on power generation sector, electric transmission and distribution sector, and retailing sector. While in China, after reforms focusing on separation between administrative body and investor, separation between administrative body and entities, separation between power generation plants and power transition/distribution sector, as well as separation between secondary lines of business and core business in the early 2000s, no vital reforms were implemented until cost-plus regulation was put into place on a trial base in power transition/distribution sector of Shenzhen city in December,2014. As known, the essential content of cost-plus regulation is to limit the coverage of costs and to set the maximum value of return on capital investments.Alongside with rapid economic development over last several decades, Chinese electric industry has also witnessed remarkable growth. However, due in part to monopolistic operation, information asymmetry, insufficient and inefficient regulation,the image of network sector of power industry is unclear, un-transparency and unreasonable, and consequently network sector has been becoming the target of public debate, or public criticism. To response those public concerns, this study is designed to gauge the levels of technical efficiency of Chinese electric network sector, using panel data which cover 28 provincial network corporations from 2005 to 2011. Technical efficiency is equal to the ratio of observed inputs (or outputs) to optimal inputs (or outputs), given outputs (or inputs). Since we can never observe optimal values which can only be estimated by models, parametric and non-parametric frameworks are developed to construct frontier with which observed values are benchmarked. The virtues of nonparametric method are no need to specify function form and the weaknesses of it lie in its inability to separate inefficiency term from error term. On the contrary, parametric framework has the ability to distinguish inefficiency from error while suffering from the risk of misspecification of function form. Productivity have always been used to measure economic condition 6f a country or a industry because it reflects influences of factors (like captical, labor) on performance.In order to discuss technical efficiency and productivity change of electric transportation in china and reduce the information asymmetry, the present study estimates the level of technical efficiency as well as the total factor productivity using four different stochastic frontier models. Estimated results show that efficiency levels from BC92 model are lowest, with an average value of 0.51, while the efficiency scores from true random effects model are highest, with an average value of 0.94. The efficiency levels of Chinese electric network sector have little improved over sample period. Furthermore, our findings show that the total factor productivity decreased by 2.01 percentage annually during sample period, which resulted mainly from technical regress. Individually, five corporations exhibited continuous growth in total factor productivity and five electric network corporations in northwest China attributed their decrease in productivity to scale efficiency regress, instead of technical regress. From the viewpoint of policy implications, firstly, it is absolutely necessary to set an incentive-based price regulation which aims at improving efficiency levels of electric network sector. Secondly, it seems that increasing investments in network set, especially constructing smart power grid is a valid way to improve productivity levels. |
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