The Impacts Of Dual Markets Incentives On Enterprises Markups

Growing uncertainties,such as trade friction,technological blockade and the COVID-19 pandemic,have increased downward pressure on the Chinese economy.China’s economic development needs to rely more on the domestic market and the improvement of the competitiveness of enterprises.The Fifth Plenary Session of the19 th Central Committee of the Communist Party of China pointed out that we should accelerate the establishment of a "dual circulation" development pattern in which domestic economic cycle plays a leading role while international economic cycle remains its extension and supplement.The key to building the development pattern lies in the realization of unimpeded economic circulation and industrial correlation.Therefore,it is necessary to deepen reform,expand high-level opening up,reduce and break the segmentation of domestic regional markets,achieve an efficient and high-quality dynamic balance between supply and demand,and strike a "combination" of both domestic and foreign market demands,so the "sea" of the Chinese market can become the ideal place for all kinds of "Marine life".This paper studies the impact of dual market incentives and regional market segmentation on markups.Taking Chinese industrial enterprise data and customs data as the main research data,this paper empirically studies the influence of domestic and export sales scale on enterprise markups,and further introduces domestic regional market segmentation on this basis,and investigates the adjustment effect of domestic regional market segmentation on the "dual market incentive effect" of domestic and foreign markets.From the data,the level of regional market segmentation tends to weaken on the whole,and the level of market integration continues to improve.Domestic and foreign market demand of enterprises expanded overall,but fluctuated during the global economic crisis;During the sample period,the mark-up rate of enterprises decreased slightly on the whole,but the cost mark-up of state-owned enterprises increased significantly,the cost mark-up of private enterprises was stable on the whole,and the cost mark-up of foreign-funded enterprises and Hong Kong,Macao and Taiwan enterprises decreased.The conclusion of this paper shows that the expansion of both domestic and export sales can significantly increase the markups of enterprises and form the "dual market incentive effect",while the segmentation of domestic regional market has a significant weakening effect on the "dual market incentive effect".In the heterogeneity analysis,it is found that the scale of domestic and export sales has a steady effect on the promotion of markups.However,the moderating effect of domestic regional market segmentation is different.The influence of domestic market segmentation on the "dual market incentive effect" of enterprises will be different due to the different ownership of enterprises,the trade pattern of enterprises and the region where enterprises are located.In the mechanism test,it is found that the "dual market incentive effect" increases the markups of enterprises mainly through promoting innovation and scale economy,but the export scale expansion has no significant incentive effect on innovation.The weakening effect of market segmentation on the "dual market incentive effect" is mainly caused by the "market substitution effect",which increases the export tendency of enterprises,increases the export share of enterprises,and meanwhile loses part of the domestic market share,leading to the potential "dual market incentive effect" being greatly weakened.Based on the theoretical and empirical analysis,this paper puts forward the relevant policy suggestions:(1)Promote high-quality opening-up and promote the improvement of enterprise competitiveness;(2)Promote the integration of domestic market,break the regional market segmentation,and improve the efficiency of resource allocation;(3)Smooth the domestic circulation,fully release the demand potential of the domestic super-large market scale.