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

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