Market segmentation and urban CO emissions in China: Evidence from the Yangtze River Delta region.

Abstract

As the largest CO emitter in the world, China plays a crucial role in global CO emission reduction. Meanwhile, as the largest developing country, China gives top priority to economic development, especially balanced regional development. In order to narrow regional development inequality, China has formulated some economic zone plannings to weaken market segmentation. However, existing studies pay little attention to the impacts of intra-national trade barrier on CO emissions within China. This is the first study to investigate the impact of market segmentation on urban CO emissions in China, taking the Yangtze River Delta region as a sample that is the most developed region with a high economic integration in China. Using a city-level panel data set during the period of 1995-2014 and the fixed effect model, we verify the nonlinear relationship between market segmentation and urban CO emissions measured by three indicators, i.e., total CO emissions, per capita CO emissions and CO emissions per unit of GDP. We also use the generalized method of moments (GMM) to control the endogeneity problem, and further adopt the threshold regression model to check the robustness of the baseline results. The results show that there is a U-shaped curve relationship between market segmentation and urban CO emissions. A low level of market segmentation restrains CO emissions, while a high level of market segmentation promotes CO emissions. This finding is helpful to understand CO emission trends and narrow regional economic inequality accompanied with the implementation of China's economic zone plannings.