ABSTRACT
Reforms in China's power industry are used as an example to understand institutional changes in power industries more generally for several reasons. This chapter applies the framework developed by the new institutional economists to analysing institutional changes in the power industry in China. It discusses institutional change by focusing on a combination of changing perceptions of political and economic entrepreneurs, changing ideological beliefs and technical ideas, and broader political and economic changes, which together affect the formation of different institutional arrangements. The chapter outlines the traditional institutional structure of the power industry by emphasizing its political and economic ideation supporting public monopolies and vertical integration. The international financial institutions joined the trend, pursuing privatization and restructuring of the power industry in developing countries. The chapter concludes that the institutional structure of the power industry should be seen as a self-sustaining system of shared beliefs.
