A Study on China’s Urban Electricity Productivity Convergence with Spatial Smooth Transition Effect

This paper analyzes the absolute convergence of urban electricity productivity in China during 1990–2011, applying Spatial Error Smooth Transition Auto-regression Model, and examines the spatial effect in convergence process. Then it analyzes the stage characteristics of electricity productivity convergence during the process of electricity market reformation and the conditional convergence which is affected by the urban economy. According to the results of our research, there exists significant absolute convergence of urban electricity productivity in China, and the spatial effect, especially spatial smooth transition effect, significantly enhance the convergence of urban electricity productivity. Since the electricity market reformation in 2002, significant stage characteristics exist in convergence of urban electricity productivity. The convergence rate of electricity productivity before 2002 is obviously lower than the one during the whole sample period, also the one after 2002 and the spatial nonlinear effect strengthens during the later period with marketization in electricity market and stricter regulation on energy conservation. The urban economy also affects the convergence of urban electricity productivity, while it does not promote the convergence rate because the high proportion of electricity-intensive industry in cities of western and northeastern region. At the conclusion of our paper, we put forward policy suggestions with the objective of narrowing the gap of urban electricity productivity and realizing sustainable urban development.