Energy Market Distortion,technical Progress And Energy Efficiency

Since the implementation of reforms and opening up policy,the production market of China has gradually eliminated the restriction of planning instruction and the market mechanism is becoming the determinant force that configures the final product.However,the marketization of producing factors still fails to progress,lagging considerably behind the final product market.The status of energy marketization directly results in long-term underestimated energy prices in China which has caused considerable unnecessary waste of energy factors and lower energy efficiency than the advanced international level.The rebound effects of technological progress on energy efficiency have been confirmed by many scholars,the nonlinear mechanism need to be further researched.Specific regional energy policy need to be further discussed.This paper analyses the interaction effects of market distortion and technological progress on energy efficiency systematically and puts forward the theoretical hypothesis: technological progress has nonlinear effects on energy efficiency under the effects of market distortion.Based on the general equilibrium theory,the paper builds theoretical model and analyses the indirect effect between market distortion and technological progress.Moreover,theory of transmission mechanism of the effect is discussed.Then,the paper focuses on the index interpretation and statistical analysis of energy market distortion and provinces are classified based on energy market distortions index to identify the provincial heterogeneity under the perspective of energy market distortions.Secondly,the paper tests the interaction effect using the panel data of 29 Chinese provinces from 1998 to 2014 which confirmed the existence of interaction effect.Further,this paper examines the effects of market distortion?technological progress on energy efficiency on the basis of preliminary test.Specifically,this paper constructs the indexes of energy efficiency,energy market distortion,technological progress,foreign direct investment proportion? the tertiary industry proportion and energy endowment.Furthermore,the paper uses a non-dynamic panel threshold regression model to examine this intervention effect.Results show that when the distortion index of the energy market,called gamma,is greater than the threshold value of 1.706,then it cannot significantly improve energy efficiency that barely relies on a technological progress-oriented policy.This index can even reduce energy efficiency because of the ‘rebound effect'.When gamma is less than the threshold value of 1.706,technological progress will significantly promote energy efficiency.We divide the 29 provinces of China into 5 types of development according to the interval types of energy market distortions and propose specific policy implications for each type.