Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector Hang Gao University of Leuven Johannes Van Biesebroecky

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Monday, July 30, 2018

The 2002 restructuring of the Chinese electricity sector reshaped the market structure by vertically unbundling the dominant integrated rm and put forward a road map towards wholesale price liberalization. We estimate factor demands to study whether these reforms boosted productivity in the generation segment of the industry. Controlling explicitly for sources of price-heterogeneity across firms and the endogeneity of unobserved productivity effects, we find the reform to be associated with a reduction in labor input and material use of 6 and 4 percent, respectively. This effect only appears two years after the reforms and is robust to alternative ways of identifying restructured firms.

Author(s)
Hang Gao
Johannes Van Biesebroeck