'Neighbors as Competitors' or 'Neighbors as Partners': How Does Market Segmentation Affect Regional Energy Efficiency in China?

28 Pages Posted: 15 Apr 2020

See all articles by Liang Nie

Liang Nie

Tianjin University

ZhongXiang Zhang

Tianjin University - Ma Yinchu School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 13, 2020


Existing studies have focused on the impact of inefficient resource allocation on energy performance in China’s factor market, but neglected to explore the underlying reason from the perspective of market segmentation. In this paper, the epsilon-based measure model and price index method are employed to measure energy efficiency and examine the degrees of market segmentation. We then use the Tobit model to empirically investigate the impact of market segmentation. The results show that the energy efficiency gap is narrowing significantly between the eastern and central regions, but insignificantly between the western and eastern. The western provinces still have more segmented markets than the eastern. Econometric analysis indicates that market segmentation is negative to China’s energy efficiency significantly. This finding remains robust but is of a regional heterogeneity. We also find that factor market distortion, enterprises’ R&D investment, and industrial agglomeration are three mechanisms through which market segmentation affects energy efficiency, and a Race to the Top competition centering on market segmentation among Chinese local officials triggers a long-term inhibition to energy efficiency.

Keywords: energy efficiency, market segmentation, factor market, EBM model, Tobit model, SBM model

JEL Classification: Q43; Q48; 013; P23; P28

Suggested Citation

Nie, Liang and Zhang, ZhongXiang, 'Neighbors as Competitors' or 'Neighbors as Partners': How Does Market Segmentation Affect Regional Energy Efficiency in China? (April 13, 2020). USAEE Working Paper No. 20-438, Available at SSRN: https://ssrn.com/abstract=3575115 or http://dx.doi.org/10.2139/ssrn.3575115

Liang Nie

Tianjin University

92, Weijin Road
Nankai District
Tianjin, Tianjin 300072

ZhongXiang Zhang (Contact Author)

Tianjin University - Ma Yinchu School of Economics ( email )

92 Weijin Road, Nankai District
Tianjin 300072
+86 22 87370560 (Phone)

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