Abstract
This study aims to estimate, compare, and explainefficiency levels of China’s power grid sector in the before- and after-2015 regulatory reform period by using six different stochastic frontier models with a panel data set covering 23 provincial power grid companies in mainland China and spanning 2006-2021. Empirical results show that efficiency scores range from 0.737 to 0.974, depending on models used. What is important is that there are no statistically significant differences in efficiency levels between the pre- and post-regulatory reform period. To explain the reasons behind these surprising results, the study firstly links these outcomes to the internal benchmarks and incredible regulatory commitments of the 2015 revenue cap regime and then relates the characteristics of the 2015 revenue cap regime to background social and political institutions. Finally, some suggestions for both China and other developing countries that may consider introducing best practices from developed countries are put forward.