Influence of capital allocation on interregional inequality of public services: differentiated evidence of investment by the government and market in China

Abstract

ABSTRACT Interregional inequality of public services is accompanied by their combined supply by government and market. This study investigates whether the spatial allocation of regional investment influences inequality and explores the differentiated source of such influence, distinguishing between government investment and private investment in China. Results suggest that the interregional inequality of public services is spatialised by the distorted spatial allocation of investment, which manifests itself as capital market segmentation, and it is aggravated by government investment but relieved by private investment. Such effects derive from differences in local protectionism, interregional competition and capital flow between government investment and private investment.