A Study On How Much Market Segmentation In China Affects The Regional Technical Efficiency

Based on China's actual situation in regional economic development, with the relevant research results at home and abroad, this paper analyze China's market segmentation on the impact of regional technical efficiency empiricall. Using Stochastic Frontier Analysis and BC92 model, this paper measures the technical efficiency of China's 28 provinces between 1978 and 2005. At the same time, making use of price index analysis method of Parsley and Wei (2000, 2001), this paper calculates the degree of market segmentation of China's 28 provinces between 1986 and 2005. Based on two work above, this paper establishes a panel data model, and analyzes the impact of China's segmentation on regional technical efficiency quantitatively. We view:Firstly, technical efficiency of our various areas is in low level, and it still has room for further improvement. Fortunately, the technical efficiency in all 28 provinces shows rising trend. The difference of technical efficiency among the 28 provinces is large, and the eastern region's technical efficiency level is higher than the national average level, while central and western regions' technical efficiency level is lower than the national average.Secondly, overally, the regional market tends to integration, and the degree of market segmentation of all regions is continually weakening in slightly concussion. From change trend between 1986 and 2005, the degree of market segmentation of eastern provinces is slightly higher than central and western provinces', while the speed of its integration is also higher than central and western provinces'.Thirdly, there is a significant negative correlation between the market segmentation and technical efficiency, and it shows that the market segmentation plays a significant impedimental role to the technical efficiency. And the quality of the laborers, the Outward degree, development of the financial also have significant impact on the technical efficiency.Finally, this study gives the main conclusion, of which the policy inspiration is provided for promoting the regional market to integrate and improving the level of technical efficiency.