Effects of Market Segmentation on the Total Factor Productivity of Enterprises:Evidence from Chinese Manufacturing Enterprises
The national unified market is an essential guarantee for improving the socialist market economy system.However,market segmentation in various provinces and cities across China has emerged as constraint restricting economic development.The study explores the impact of market segmentation on enterprises'total factor productivity(TFP)from a micro-enterprise perspective.Using the structural estimation method,the study calculates the TFP of Chinese manufacturing enterprises from 1998 to 2008,and employs the relative price variance method to measure the degree of market segmentation in 29 provinces during the same period.The empirical results show that market segmentation has a negative impact on the TFP of enterprises.It reduces the TFP of enterprises by inhibiting economies of scale,suppressing innovation and R&D,and overprotecting state-owned enterprises.In addition,the negative impact of market segmentation is greater on the TFP of non-export enterprises,enterprises in the eastern region,and non-state-owned enterprises.To break market segmentation and enhance enterprise efficiency,the government should strengthen macro management,build a modern service-oriented government;stimulate the vitality of micro-subjects,and actively construct a modem market system;improve laws and regulations,and implement the fair competition review system.
Market SegmentationTotal Factor ProductivityManufacturing Industry
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