Innovative incentive effects of domestic market integration: Evidence from the Yangtze River Delta region of China

Abstract

This study employs a quasi-experimental Geographic Regression Discontinuity Design (GRDD) method to assess the effects of market integration on corporate innovation within China’s Yangtze River Delta region. Our findings reveal a significant positive impact of domestic market integration on innovation, especially for advanced technological innovations. This result is supported by rigorous robustness tests. Mechanism analysis indicates that the establishment of the Yangtze River Delta City Economic Coordination Committee has eased the movement of goods and production factors within the region and bolstered domestic enterprise sales. Consequently, these developments have strengthened firms’ innovation capabilities by promoting more efficient market mechanisms. This paper provides new evidence supporting the dismantling of regional barriers to expand domestic demand and stimulate corporate innovation in the context of deglobalization trends.