Abstract
Several measures in China are adopted to control the energy price so as to promote economic development. Energy allocation distortions are thus resulted in, which further do harm to both the economic output and efficiency. In this paper, we empirically analyze the impacts of removing energy allocation distortion on economic output and energy efficiency in China. First, we calculate the distorted amounts of energy in primary, secondary, tertiary industries and whole China. Then we analyze the relative and absolute energy allocation distortion among different sectors. Finally, we investigate the impacts of eliminating energy distortion on both economic output and energy efficiency. We find that the actual energy consumptions in primary and tertiary industries are less than those if there were no distortions. The case of secondary industry is on the contrary. Removing the energy allocation distortion can promote the increase of both economic output and energy efficiency. These findings demonstrate that eliminating energy allocation distortion is still a main task for Chinese government, and it will help to conserve energy globally.
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