Domestic Trade Barriers,Firm Supply Chains and Firm Innovation
Building a unified domestic market and establishing a new development pattern of domestic and international dual circulation are of great signif-icance for achieving high-quality economic development This paper is based on data from listed firms and matches it with data from the supplier firms and customer firms of these listed firms.By using input-output tables to estimate domestic trade barriers,the study empirically analyzes the impact of domestic trade barriers on hindering innovation within firms by obstructing their supply chains.The study found that domestic trade barri-ers significantly inhibit the improvement of firm innovation levels by obstructing the supply chain.The conclusion still holds true even after a series of robustness tests.This inhibitory effect is more pronounced for firms in industries with longer industrial chains,joint innovation types,firms with strong upstream and downstream linkages,private firms,high-productivity firms,and technology-intensive firms.Mechanism analysis reveals that supply chains hindered by domestic trade barriers suppress the improvement of firm innovation levels by reducing related industry support,increas-ing financing constraints,and exacerbating firm innovation risks.Further analysis shows that the strength of upstream and downstream connections exacerbates the innovation inhibitory effect caused by domestic trade barriers hindering supply chains.Additionally,hindering supply chains with domestic trade barriers not only hinders the formation of the new dual circulation development pattern but also obstructs the firm innovation process.Finally,the study finds that institutional trade barriers are the main factor inhibiting supply chains and suppressing firm innovation among various trade barriers.