Market Segmentation and Green Development Performance: Evidence from Chinese Cities

This study is based on 2006-2019 panel data from 282 Chinese cities. Market segmentation and green development performance are empirically investigated to examine their non-linear relationship using static panel, dynamic panel, and dynamic spatial panel models. The results reveal the following: (1) Green development performance is found to have a high degree of temporal and spatial path dependence, exhibiting spatial linkage between cities. (2) Market segmentation stemming from local government protection has a clear inverted U-shaped structure in relationship with the green development performance. (3) Our analysis suggests that the upgrading of industrial structures significantly enhances green development, while factor price distortion inhibits it. The relationship between market segmentation and industrial structure upgrading is also an inverted U-shape. (4) The analysis further reveals that market segmentation has an inverted U-shaped correlation with the green development performance in western, central, and eastern cities. However, the different rates of development of industrial structures within the three regions result in varying degrees of market segmentation according to inflection point values. Moreover, aligned with the theoretical hypothesis of "resource curse," in resource-based cities (exclusively), market segmentation still affects the green development performance with a significant inverted U-shaped structure.