Market Integration and Regional Innovation in China: Evidence from the Yangtze River Delta Region

Market integration is an important tool for China's regionally coordinated economic development. At the same time, China is implementing an innovation-driven development strategy. Therefore, the way the market integration affects regional innovation is of great significance to analyze this problem. The panel data of 27 cities in the Yangtze River Delta region in China with the highest degree of economic integration from 2009 to 2018 are used to investigate the impact of market integration (MI) on regional innovation (RI). The main findings are as follows: the first-order lag term of RI is significantly positive, and RI has certain path dependence. In this regard, MI has a positive impact on RI and promotes RI. The estimated coefficient of MI is significantly positive and has a positive impact on RI and promotes RI. This provides a reference for promoting RI through MI. The contributions of the paper are threefold: (1) This paper examines the impact of MI on RI to provide policy implications for the coordinated development of innovation between regions. (2) The relative price method is adopted to measure the MI, which covers 16 kinds of commodities, covering a wider range than does the traditional method. (3) This paper uses the generalized method of moments (GMM) to test the effect of MI on RI for the first time.