Does market segmentation hinder interregional CO2 flow in China? — Evidence from China’s interprovincial MRIO table

Abstract

China is the key player in the globalization era and is eliminating its intra-national trade barrier. This process will affect interprovincial CO2 flows. This study recalculates interprovincial CO2 flows in China by using the latest MRIO table and applies a gravity model to assess how market segmentation affects interprovincial CO2 flows. Results show that the total volume of interprovincial embodied CO2 flow did not increase excessively from 2007 to 2012, but the pattern of embodied CO2 flow had changed a lot. Market segmentation significantly decreased the interprovincial embodied CO2 flows in China and within its sub-regions. At interregional level, market segmentation’s negative effect was significant between Central and Western China. Other variables such as geographical distance showed a significant negative impact on interprovincial embodied CO2 flow in China. On the basis of our results, we raise some relevant policies to deal with the environmental inequality caused by the decrease in market segmentation.