Market Integration, Industrial Structure, and Carbon Emissions: Evidence from China

Abstract

Against the backdrop of China’s carbon emission reduction targets and the promotion of the construction of a unified domestic market, what kind of carbon emission effect has market integration had in weakening regional barriers and optimizing resource allocation? This paper adopts a two-way fixed effects analysis based on China’s provincial panel data from 2003 to 2019. It uses a mediation model to explore the relationship between market integration and carbon emissions. Furthermore, industrial rationalization and upgrade are the basis for examining whether a competitive or cooperative relationship exists between the carbon emission effects generated and promoting market integration between regions. The study finds a negative relationship between market integration and carbon emissions. In addition, there is significant heterogeneity in the effect of market integration on carbon emissions, and the influence effect is mainly in central China; industrial rationalization can play an enhanced role in the process of the negative impact of market integration on carbon emissions, further enhancing the negative contribution of market integration to carbon emissions. However, market integration can weaken its negative impact on carbon emissions with the industrial upgrade, and there may still be invisible barriers between regions in promoting market integration barriers.