Stranded Costs and Competition Efficiency

The reform of utility beginning at the last century 80' rolls up the world in more than20 years.Deregulation and the introduction of competition are used in most countries to solve utility efficiency question.However,the reform has also brought the regulators and the economists' new challenges.The stranded costs question is the most important of them.This article tries to show how stranded costs affect the efficiency of competition by Cournot model.At last we present the possibility to solve stranded costs question and improve competition efficiency with analysis of the character of Chinese electricity market.