Different interaction mechanisms of market structure in the construction industry TFP from the spatial perspective: A case study in China

Abstract

Total Factor Productivity (TFP) is a measure of long-term economic growth and a comprehensive industry-level productivity measure. China’s construction industry exhibits a ladder-like distribution among the central, western and eastern regions and has low productivity. Using methods consisting of the DEA-Malmquist index, measurement for the market structure, and panel data model in accordance with the Structure-Conduct-Performance (SCP) paradigm, this study systematically analyzed the different interaction mechanisms of scale structure, ownership structure, industrial structure, and specialization structure of China’s construction industry among the western, central and eastern regions over the past six years. It finds that the traditional SCP paradigm of the industrial economy is also applicable to the construction industry. The enterprise scale has a positive impact on the construction industry TFP of the entire country and the western region, while the proportion of state-owned enterprises has a negative influence on the construction industry TFP of the entire country and particularly the western area. Meanwhile, industrial structure has a positive effect on the construction industry TFP of the eastern area and a negative effect on that of the central area. Additionally, the proportion of general contractors on construction enterprises has a positive impact on the regional construction industry TFP. The research method presented in this study can be applied to other countries as well as to other industries, analyzing the interaction mechanisms of market structure in productivity from the spatial perspective. Therefore this study provides a systematic research methodology for the measurement of regional industry productivity and the identification of impact factors.