Examining the Impact of Market Segmentation on Carbon Emission Intensity in China

Abstract

Market segmentation behavior has led to environmental issues, notably, carbon emissions, during China’s economic transformation, posing a significant challenge to ongoing economic progress. This study builds upon the existing literature and empirical analyses on market segmentation and carbon emissions, establishing a theoretical framework to understand the relationship between market segmentation and carbon emission intensity. Using a panel dataset covering Chinese provinces from 2003 to 2020, we systematically examined the impact and transmission mechanisms of market segmentation on carbon emission intensity. This study revealed the following findings: (1) there is a significant positive correlation between market segmentation and carbon emission intensity, which remains true after a series of robustness tests; (2) the promoting effect of market segmentation on carbon emission intensity in the eastern region is significantly lower than that in the central and western regions and, as time goes by, the promoting effect of market segmentation on carbon emission intensity becomes smaller and smaller; (3) resource mismatch and industrial structure are two important transmission channels through which market segmentation affects carbon emission intensity; (4) market segmentation demonstrated a distinct positive spatial contagion impact on carbon emission intensity. This study provides valuable policy recommendations to align with China’s ‘dual carbon goals’ by supporting a unified market and fostering low-carbon development. These recommendations aim to steer China’s economy toward a greener and low-carbon transformation.