Environmental efficiency of electric power industry, market segmentation and technological innovation: Empirical evidence from China

Environmental efficiency of electric power industry (EEE) is crucial to sustainable development. Among all the factors affecting the efficiency, there lacks enough knowledge of the role of governments and institutions in it. The purpose of this study is to explore the effect of market segmentation (ME) on environmental efficiency of electric power industry and its influencing mechanism from the perspective of technological innovation. The empirical results generated by the system generalized method of moments (GMM) approach indicate that market segmentation has significantly negative effect on environmental efficiency of electric power industry. As evidence we find shows, market segmentation hinders technological innovation, which is an important factor affecting environmental efficiency of electric power industry. Additionally, the inhibiting effect of market segmentation on environmental efficiency of electric power industry is more significant in provinces with weak institutional quality. The conclusions share insights in how to improve environmental efficiency of electric power industry in China by weakening market segmentation.