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The influence of tax incentives on market segmentation in the context of a unified national market

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  • Liu, Jun
  • Huang, Bihui
  • Hu, Yaoyu

Abstract

The new development pattern prioritises the construction of a unified national market, eliminating market segmentation and promoting resource flows. This paper investigates the impact of tax incentives on market segmentation using China's provincial panel data from 2003 to 2019 through a two-way fixed effects model. The results indicate that tax incentives reduce market segmentation. The analysis of heterogeneity reveals a non-linear relationship between the effects of tax incentives on market segmentation. Tax incentives reduce market segmentation in regions with low tax incentives, but have a limited effect or even exacerbate segmentation in regions with high incentives.

Suggested Citation

  • Liu, Jun & Huang, Bihui & Hu, Yaoyu, 2024. "The influence of tax incentives on market segmentation in the context of a unified national market," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006214
    DOI: 10.1016/j.frl.2024.105591
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    References listed on IDEAS

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    2. Zhou, Qianling & Li, Tao & Gong, Liutang, 2022. "The effect of tax incentives on energy intensity: Evidence from China's VAT reform," Energy Economics, Elsevier, vol. 108(C).
    3. Yue Cao & Xinyu Hu & Yu Lu & Jun Su, 2020. "Customer Concentration, Tax Collection Intensity, and Corporate Tax Avoidance," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(11), pages 2563-2593, September.
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