| According to World Bank’s report of1994, China’s domestic market integration is well below the United States and Europe. China’s current level of market integration is far from achieving adequate allocation of resources. Since China’s participation into the World Trade Organization (WTO), there has been an increasingly higher demand for China’s domestic market integration. Researches on market segmentation trends and its effect on the economy therefore have profound practical meaning to the sustainable development of China’s economy.The topic of market segmentation has rarely been researched in China. Empirical researches are very scarce. Most of the current researches only focus on macro side of economic development, which ignores the micro channel of economic performance. The main purpose of this paper is to gain a better understanding of market segmentation in China from the perspectives of enterprises export, the development of small and medium sized enterprises (SMEs) and the economic growth. This paper applies the modern quantitative analysis method to investigate the effect of market segmentation and the influential factors by creating provincial market segmentation index. The major findings are as follow:1. Evaluating the trend of market segmentation and influential factors with the provincial index of commodity market segmentation.We observe China’s market segmentation trend by constructing price index of market segmentation with provincial panel data from1991-2008in17years. And according to the unit root test, we find that there is stable convergence trend in the degree of market segmentation, showing that China is gradually heading towards market integration. Also, we find that the indicator of openness measurement, the import and export trade of the total amount of GDP, has negative and very significant influence on market segmentation. After China joins WTO, regional market segmentation index fell by4.15-7.94%, indicating that accession to WTO promotes market integration and its related macro-adjustment policies played a significant role.2. Analyzing the impact of market segmentation on economic growth by region and time.We use provincial panel data from1993to2008to study the effect of market segmentation on economic growth and the transmission mechanism. The research shows that market segmentation and economic growth has inverted U-shaped relationship. The effect of economic openness and the proportion of investment in fixed assets on economic development are significantly positive, which indicates that the opening-up and investment in physical capital can promote economic development. The effect of government intervention is negative, indicating the greater degree of government intervention, the more negative effect on economic development.3. Estimating the effects of market segmentation on exports of enterprisesTaking listed companies of manufacturing during2006-2008as the sample, we evaluate the effect of market segmentation on the exports of enterprises. We choose two-part model and sample selection model to solve the sample distribution problem. Results show market segmentation has negative effect on export propensity and exports rates of enterprises. Also, the influential factors are quite different depends on the firm size. Through robustness test, we find the results remain the same.4. Measuring the effects of market segmentation on the development of small and medium sized enterprisesUsing provincial panel data during2002-2007, we study the effect of market segmentation on small and medium sized enterprises, as well as to discuss polices of promoting regional development of SMEs. Research found that market segmentation has negative effect on the growth rates of SMEs amounts, total employment, as well as the outputs, indicating that market segmentation hinders the development of SMEs. The proportion of fixed assets investment and rate of technological progress shows significant positive effects, and the government should strive to improve the financing capacity of SMEs and create a favorable external environment for SMEs to compete in an open, fair and equitable way. |
