ZHANG Hao:On the Trend of Chinese Regional Market: Segmentation or Integration——A Thorough Inquiry and Improvement of Methodology

Abstract：Price Method is a common approach to measure the degree of market segmentation, but this paper argues that, using the logarithmic differentiation of price index, instead of actual price data, may lead to biased conclusions, especially as the domestic market of China has been more united than before.This paper improves the Production Method and the Price Method from the aspect of principle and data respectively.Based on Production Method, the industrial structure is compared with the demand structure to reflect the efficiency of factor allocation more accurately (this approach can be called the Production & Demand Method).According to the principle of Price Method, it is required to use the actual price data of commodities in different provinces, which can provide the information of price differences across regions.After these improvements, the two methods come to agree with each other, but the conclusion is different from the existing practice: the domestic market of China tends to go more segmented again after the year of 2006, especially in the central, north and southwest regions.

Key words： Domestic Market Segmentation   Production Method   Production-Demand Method   Price Method   Regional Price Differences

source:Finance & Trade Economics ,No.11,2014