The Research About Coal-Electricity Vertical Dual Pricing System In China

China is a country whose electricity is most generated from burning coal. Coal industry is closely linked with electricity industry, harmonization of the relation between them is critical to stable supplying of electricity. But recently the conflict between coal industry and electricity industry arises frequently. On the past coal trade conferences, coal firms and electricity firms often quarreled over coal price, which caused unbalance of electricity supplying and disturbed the national economy. The conflict between coal industry and electricity industry has been a paradox which is not easy to interpret. The outside reason for the conflict is profit snatching, but the real reason is the inconsistency on coal price and electricity price:the reform in coal industry in advance of the reform in electricity industry. From the point of vertical pricing, the paper analyzes the relation between coal industry and electricity industry. "Vertical Dual Pricing System" is a economic concept advanced by Yu Li(1992), which means two kinds of price forming mechanism coexist in different stages of producing. At the moment Chinese coal price is formed in marketing manner and Chinese electricity price is regulated rigorously by government, which is "Vertical Dual Pricing System(VDPS)" typically. VDPS is core concept in the paper. Based on VDPS this paper constructed a vertical relation model about coal industry and electricity industry, then empirically tested VDPS through econometric method. A detailed account of the paper constitutes the following four parts:Firstly, according to the reality of the Coal and the power industry of China, the paper built a game model of the vertical relations of the coal and electricity in which the VDPS and coal-electricity linkage policy was evaluated. From two aspects, the impact of economic growth, concentration of the coal industrial, resource tax fee reform on the coal-electricity vertical relations was investigated. The conclusions by theoretical models have a certain reference value for policy-makers. Secondly, the relationship between supply-demand imbalance and VDPS was empirically tested by using Chinese history data. The shortage of electricity remaining a few years provides a vivid two-track material for the study on VDPS. The electricity shortages every year was estimated using collected data, then the interaction between electricity prices and electricity shortages, the interaction between coal prices and electricity shortages is explored, the relationship between electricity prices and VDPS was tested. Thirdly, the experiences and lessons of VDPS in foreign countries were introduced. VDPS also appeared in California and the United Kingdom reform process and summarizing their experience and lessons will be of great benefit to China. Fourthly, the electricity consumption and coal consumption patterns under VDPS are analyzed. Based on the electricity consumption patterns and coal consumption patterns which were estimated previously, the demand for electricity as well as the demand for electricity was evaluated in order to forecast the future.The paper draws five research conclusions. First, there is VDPS between coal industry and electricity industry. It is the VDPS that leaded the conflict between coal industry and electricity industry, which also caused the unbalance of supply-demand. Second, under VDPS economic growth, concentration of the coal industrial, resource tax and fee reform will affect the unbalance of supply-demand. But these factors itself don't lead the unbalance of supply-demand. If the VDPS is canceled, economic growth, concentration of the coal industrial, resource tax and fee reform will remove the equilibrium only. Third, there are many difficulties in coal electricity price allied move policy. The optimal allied move price is the outcome of two stages game. It is impossible to get the outcome in reality except try and try whose cost is huge. Fourth, VDPS is impossible maintain a long time. VDPS encourage enterprise to waste electricity and electricity consuming leads coal exhausting, so VDPS threats the energy carrying Capacity in China. Fifth, VDPS should be canceled quickly. The proper solution about conflict between coal industry and electricity industry is to accelerate the pace of electricity and introduce coal futures in order to stabilize the fluctuation coal prices.