Market segmentation and industry overcapacity considering input resources and environmental costs through the lens of governmental intervention

Jiang, Zhou; Jin, Peizhen; Mishra, Nishikant; Song, Malin

Abstract

The problems with China’s regional industrial overcapacity are often influenced by local governments. This study constructs a framework that includes the resource and environmental costs to analyze overcapacity using the non-radial direction distance function and the price method to measure industrial capacity utilization and market segmentation in 29 provinces in China from 2002 to 2014. The empirical analysis of the spatial panel econometric model shows that (1) the industrial capacity utilization in China’s provinces has a ladder-type distribution with a gradual decrease from east to west and there is a severe overcapacity in the traditional heavy industry areas; (2) local government intervention has serious negative effects on regional industry utilization and factor market segmentation more significantly inhibits the utilization rate of regional industry than commodity market segmentation; (3) economic openness improves the utilization rate of industrial capacity while the internet penetration rate and regional environmental management investment have no significant impact; and(4) a higher degree of openness and active private economic development have a positive spatial spillover effect, while there is a significant negative spatial spillover effect from local government intervention and industrial structure sophistication. This paper includes the impact of resources and the environment in overcapacity evaluations, which should guide sustainable development in emerging economies.

Citation

Jiang, Z., Jin, P., Mishra, N., & Song, M. (2017). Market segmentation and industry overcapacity considering input resources and environmental costs through the lens of governmental intervention. Environmental science and pollution research, 24(26), 21351-21360. https://doi.org/10.1007/s11356-017-9639-4

• Acceptance Date: Jun 26, 2017
• Online Publication Date: Jul 25, 2017
• Publication Date: 2017-09
• Deposit Date: Sep 24, 2017
• Publicly Available Date: Jul 27, 2018
• Journal: Environmental science and pollution research
• Print ISSN: 0944-1344
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 24
• Issue: 26
• Pages: 21351-21360
• DOI: https://doi.org/10.1007/s11356-017-9639-4
• Keywords: Local government intervention; Market segmentation; Overcapacity; Resource and environmental costs
• Public URL: https://hull-repository.worktribe.com/output/455036
• Publisher URL: https://link.springer.com/article/10.1007%2Fs11356-017-9639-4
• Additional Information: This is the accepted manuscript of an article published in Environmental science and pollution research, 2017. The version of record is available at the DOI link in this record.
• Contract Date: Sep 24, 2017