Research On The Influence And Mechanism Of Regional Market Segmentation On Resource Misallocation

It has been the academic consensus that there exists market segmentation among regions(provinces)in China,and productivity loss caused by resource misallocation is also an important issue in the development of China's transitional economy.Resource misallocation,or the efficiency of resource allocation,is directly affected by the market mechanism,while market segmentation affects the efficiency of the market mechanism,and at last,leading to resource misallocation.This paper attempts to study the economic effects of market segmentation on resource misallocation and its internal mechanism from both theoretical and empirical aspects.In the theoretical research,this paper establishes the theoretical analysis framework of the economic effect of market segmentation on resource misallocation.Firstly,based on the neo-classical hypothesis,the theoretical model is constructed from the perspective of region,and the conclusion that market segmentation will promote resource misallocation is deduced.Then,based on the heterogeneity enterprise model,the same conclusion was derived under the framework of M-O local equilibrium model of monopoly competition,and we have the further deduction that market segmentation exert its influence on resource misallocation by weakening the replacement of enterprises and the market competition.In the empirical research,this paper uses the manufacturing sample in the database of Chinese industrial enterprises and combines a series of macroeconomic data.The sample period is from 1997 to 2015,and uses the methods of Hsieh and Klenow,Brandt,Aoki,Parsley and Wei et al to construct the indicators of resource misallocation and market segmentation.On the basis regression analysis,the results showed that market segmentation had significantly promoted resource misallocation at both the individual(company)level and the regional level,which verified the conclusion of the theoretical analysis.In addition,in the robustness check,this paper verifies the robustness of the basic conclusion from the perspective of productivity distribution and the construction of instrumental variables and adopts the two-stage least squares regression.Therefore,in the stage of China's market development,market segmentation impedes the rational flow of elements and reduces the efficiency of resource allocation,which leads to the consequence of resource misallocation.Then,on the basis of the basic conclusion,this paper further discusses and empirically analyzes the heterogeneity influences of market segmentation on resource misallocation,including heterogeneity in different economic zones,heterogeneity in different time,heterogeneity in different industry and sector.In addition to the study of the overall mismatch,this paper further analyzes the impacts of market segmentation on the misallocation of capital factors and labor factors,and draw useful conclusions.This paper also further analyzes the mechanism of the effect of market segmentation on resource misallocation.First of all,from the perspective of the replacement of enterprises in the market,this paper investigates whether the market segmentation weakens the entry and exit mechanism of enterprises in the market and leads to resource misallocation.The study found that market segmentation weakened the market entry and exit mechanism and market competition from both the perspective of enterprises and the perspective of regions(provinces),which led to resource misallocation.Then,the M-P decomposition method on productivity growth is used to decompose the productivity effects of enterprise entry and exit,and we investigate whether market segmentation has an impact on these effects and thus affects resource allocation.The study found that as the resource reallocation effect in productivity growth,the exit effect is most significantly affected by market segmentation,which indicates that the impact of market segmentation on enterprise entry and exit productivity effect is mainly affected by enterprise exit.In the last part of mechanism analysis,from the perspective of government intervention and state-owned enterprises,this paper firstly established a two-stage mixed oligopoly model.And then uses the model to theoretically explaine how the policy of market segmentation affected resource allocation through state-owned enterprises.And then verified the existence of this channel by using the intermediary effect test method.The study found that the market segmentation policy of local governments affected resource allocation through protecting local enterprises(especially state-owned enterprises)and changing the distribution of ownership structure of regional enterprises,which led to resource misallocation,and then proved this conclusion by using empirical methods such as intermediary test.Based on the above research,this paper puts forward some useful policy suggestions at the end:The government should focus on breaking down interregional market segmentation and reducing factor flow barriers;The government ought to further improve the entry and exit mechanism of market and market competition system.Treat each market subject fairly;And further deepening the reform of state-owned enterprises.The research in this paper makes up for the deficiency of theoretical analysis on the relationship between market segmentation and resource misallocation,and further studies the mechanism of action between market segmentation and resource misallocation.