Market integration and green economic growth-recent evidence of China's city-level data from 2004-2018

Very few studies exist in rationalizing comprehensively the relationship between market integration and green economic growth in China. This paper tries to answer the question whether and how market integration influences regional green economic growth in China. Based on the panel data of 285 city-level regions from year 2004 to 2018 in China, this paper develops explanatory mechanism and discusses the influence theoretically and empirically. To advance the analysis, we construct market integration indicator through relative price variance method based on commodity retail price index and employ the Malmquist-Luenberger (ML) productivity index and DEA-SBM (data envelopment analysis-slacks-based measure) model to evaluate green total factor productivity (GTFP) as indicator for green economic growth. Our empirical findings are: (1) Apparent regional imbalance exists in both the development of market integration and green growth and gaps are expanding from year 2004 to 2018. (2) Market integration promotes regional green growth significantly. (3) Mechanism analysis illustrates that market integration fosters green growth through economies of scale effect, composition effect and spillover effect, respectively. (4) Heterogeneous analysis suggests that the influence from market integration on green growth varies depending on region's difference in traffic situation and in overall development level.