The Effects of Factor Market Integration on Administrative Boundary Pollution Emissions in Urban Agglomerations of China

Reducing disparities in industrial pollution emission intensity among cities is key to alleviating spatial environmental inequities within urban agglomerations and promoting inclusive regional sustainable development. Existing research primarily analyzes the impact of commodity market integration on pollution from a macroeconomic perspective, but there is a lack of research on the impact of factor market integration within urban agglomerations on disparities in industrial pollution emission intensity among cities across provincial borders. We use matched data from the China Industrial Enterprise Database and the China Polluting Enterprises Database covering the period 2000–2013, using the inverse of the dispersion of total factor productivity (TFP) to measure the degree of factor market segmentation, thereby assessing the level of factor market integration. By constructing datasets of city pairs within urban agglomerations and distinguishing between city pairs within one province and city pairs across provinces, we arrive at three main results: (1) There are significant differences in the level of integration of factor markets across China’s 11 major urban agglomerations, with the Pearl River Delta and Yangtze River Delta ranking highest, whilst inland urban agglomerations lag significantly behind. (2) For every 1% increase in factor market integration, the difference in industrial pollution emission intensity between cities decreases by approximately 0.58%. The emission reduction effect for inter-provincial city pairs is significantly weaker than that for intra-provincial city pairs, confirming the existence of a significant provincial boundary effect. (3) In regions with well-developed transportation infrastructure and where cities are relatively close to one another, the integration of factor markets across provincial borders plays a more significant role in reducing disparities in industrial pollution emission intensity among cities. These findings not only offer insights for pollution control across administrative boundaries within urban agglomerations but also provide empirical evidence for helping promote the sustainable development of urban agglomerations.