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Club Convergence in the Energy Intensity of China

Dayong Zhang and David C. Broadstock

Year: 2016
Volume: Volume 37
Number: Number 3
DOI: 10.5547/01956574.37.3.dzha
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Abstract:
We contribute to energy policy discourse in China by demonstrating the existence of multiple energy-intensity equilibria across its provinces. Using recently developed club convergence methods, we identify three unique clubs in China, each with markedly different energy intensity profiles. Unlike in previous studies, our club groupings do not strictly adhere to common geographic separations e.g. east, west and central divisions. To better understand what commonalities/disparities lay behind their groupings, we undertake a regression of the determinants of energy intensity, in a similar vein to a number of recent studies. Doing so, we demonstrate a number of significant differences in the determinants for each of the identified clubs, given which we are able to offer a rich set of policy implications. Not all determinants are common across the three clubs, and where they are common, they can differ both in magnitude and sign, reflecting the fundamental differences across the groups.



Shocks and Stocks: A Bottom-up Assessment of the Relationship Between Oil Prices, Gasoline Prices and the Returns of Chinese Firms

David C. Broadstock, Ying Fan, Qiang Ji, and Dayong Zhang

Year: 2016
Volume: Volume 37
Number: China Special Issue
DOI: 10.5547/01956574.37.SI1.dbro
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Abstract:
Oil price shocks are known to affect the financial sector of the economy, due to the inflationary effects, and increasing costs of doing business they create. Though oil-shocks and financial markets are widely researched, there remains scope for deeper understanding using firm level data. We therefore contribute to the literature by extending widely applied multi-factor asset pricing models to a sample of 963 Chinese firms (between 2005-2013) to (i) systematically evaluate their reactions to oil price shocks, and (ii) further include regulated gasoline prices as a more direct measure of the energy-prices faced by firms. 89.2% of firms are susceptible to oil shocks, with positive and negative reactions observed even for firms within the same industry. Gasoline price shocks are more pervasive, affecting 95.7% of firms. Considering oil and gasoline separately allows us to review gasoline price regulation in China, which ultimately appears ineffective in achieving its intended goals.



Identifying Strategic Traders in China's Pilot Carbon Emissions Trading Scheme

Lei Zhu, Xu Wang, and Dayong Zhang

Year: 2020
Volume: Volume 41
Number: Number 2
DOI: 10.5547/01956574.41.2.lzhu
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Abstract:
This paper uses a sample of 1,867 firms that participate in the "Top-10,000 Energy-Consuming Enterprises Program" in China and aims to identify strategic traders in its pilot emissions trading scheme. Firms included in the ETS can exert their market power and manipulate allowance prices to achieve low compliance costs, which will consequently influence the effectiveness of this platform. This is of great importance to regulators or designers of this system in identifying these strategic traders and understanding their impact. We follow the basic principle proposed by Godal (2005) and develop a simple and implementable empirical procedure to study firm-level data from seven pilot programs in China. The results show that strategic traders exist with clear regional and sectoral differences. As a consequence of strategic trading by these firms, the overall volume of trading falls remarkably, with a clear increase in total compliance costs.





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