The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis

KK Ni; BC Xie; Eoghan O'Neill; HZ Li

doi:10.1016/j.jup.2021.101187

The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis

KK Ni, BC Xie, Eoghan O'Neill, HZ Li

Econometrics

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Abstract

China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.

Original language	English
Article number	101187
Journal	Utilities Policy
Volume	69
DOIs	https://doi.org/10.1016/j.jup.2021.101187
Publication status	Published - Apr 2021

Bibliographical note

Funding Information:
We appreciate the financial support from the National Natural Science Foundation of China (grant nos. 71874121 , 71671121 and 71431005 ), the support from National Key R&D Programme of China (grant no. 2018YFC0704400 ), and the support from Major Projects of the National Social Science Fund (grant no. 17ZDA065 ).

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© 2021 Elsevier Ltd

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title = "The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis",

abstract = "China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.",

author = "KK Ni and BC Xie and Eoghan O'Neill and HZ Li",

note = "Funding Information: We appreciate the financial support from the National Natural Science Foundation of China (grant nos. 71874121 , 71671121 and 71431005 ), the support from National Key R&D Programme of China (grant no. 2018YFC0704400 ), and the support from Major Projects of the National Social Science Fund (grant no. 17ZDA065 ). Publisher Copyright: {\textcopyright} 2021 Elsevier Ltd",

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doi = "10.1016/j.jup.2021.101187",

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AU - Xie, BC

AU - O'Neill, Eoghan

AU - Li, HZ

N1 - Funding Information: We appreciate the financial support from the National Natural Science Foundation of China (grant nos. 71874121 , 71671121 and 71431005 ), the support from National Key R&D Programme of China (grant no. 2018YFC0704400 ), and the support from Major Projects of the National Social Science Fund (grant no. 17ZDA065 ). Publisher Copyright: © 2021 Elsevier Ltd

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N2 - China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.

AB - China's power grid sector, which combines transmission and distribution, has grown rapidly after the restructuring reform in 2002. We evaluate the scale effect in the sector by employing a parametric Malmquist index based on a heteroscedastic true fixed-effects stochastic frontier model to estimate technical efficiency and total factor productivity for China's 30 grid companies from 2002 to 2017. The results show that there exists a scale effect. Most companies exhibit increasing returns to scale, total factor productivity experiences a significant growth driven by scale expansion. Companies with different scales should take differentiated actions to meet the challenges of market-oriented reform.

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The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis

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