Innovative incentive effects of domestic market integration: Evidence from the Yangtze River Delta region of China

Jiukai Hu, Deqing Luo and Yiming Wang

Economic Analysis and Policy, 2025, vol. 85, issue C, 1580-1594

Abstract: This study employs a quasi-experimental Geographic Regression Discontinuity Design (GRDD) method to assess the effects of market integration on corporate innovation within China’s Yangtze River Delta region. Our findings reveal a significant positive impact of domestic market integration on innovation, especially for advanced technological innovations. This result is supported by rigorous robustness tests. Mechanism analysis indicates that the establishment of the Yangtze River Delta City Economic Coordination Committee has eased the movement of goods and production factors within the region and bolstered domestic enterprise sales. Consequently, these developments have strengthened firms’ innovation capabilities by promoting more efficient market mechanisms. This paper provides new evidence supporting the dismantling of regional barriers to expand domestic demand and stimulate corporate innovation in the context of deglobalization trends.

Keywords: Domestic market integration; Innovation; Yangtze River Delta; Domestic demand (search for similar items in EconPapers)
JEL-codes: F15 O31 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1580-1594

DOI: 10.1016/j.eap.2025.02.006

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