Corruption, market segmentation and haze pollution: empirical evidence from China

Corruption and market segmentation generally result from inter-regional resource allocation mechanism at the level of government and market, and it is of great significance to clarify their effects on haze pollution for the healthy development of the regional economy. With theoretical analysis, this paper applies systematic GMM to examine the impact of corruption on haze pollution. The mediatory effect model is used to further evaluate the mediatory effect of market segmentation by using panel data for 30 provinces in China from 2006 to 2018. The evaluations reveal that corruption positively affects haze pollution at the 1% significance level and has a prominent “time inertia”. After alleviation of the endogenous problem and a series of robustness tests, this conclusion remains valid. Based on national samples, corruption, especially environmental corruption, not only directly provokes an increase in haze pollution, but also aggravates it through market segmentation, and, the impact of corruption on haze pollution in different regions and at different periods has significant heterogeneity. Therefore, policymakers should start from the institutional mechanism to curb haze pollution by improving the performance appraisal system. Moreover, the synergistic effect between anti-corruption and governance on the environment should be enhanced by improving the anti-corruption management system. Local protectionism should be eliminated to promote the integration of regional markets. A unified, open and organized market system should be established to form the synergy of governance on the environment.