Marketization and Household Consumption Upgrading: Evidence from China

This paper examines how marketization influences the spatial effects of household consumption upgrading in China, by analyzing provincial panel data from China between 2010 and 2022. The study employs a two-way fixed-effects Spatial Durbin Model to capture both the direct effects of marketization within a region and the spillover effects transmitted to neighboring regions. This model incorporates spatial dependence in both dependent and independent variables, providing a comprehensive assessment of spatial interactions. The results reveal that marketization and consumption upgrading both have the spatial pattern characteristics of significant spatial difference and agglomeration features. Marketization considerably encourages the upgrading of local people’s consumption and has positive spillover effects on the consumption upgrading levels of nearby regions. Mechanism analysis shows that market competition and enterprise innovation play key roles in this process. Heterogeneity analysis shows in eastern regions, areas with high industrial upgrading levels, high financial agglomeration levels, and high house prices, and the promotion effect of marketization on household consumption upgrading is more pronounced. These findings suggest that promoting differentiated regional marketization reforms, amplifying the spillover effects of marketization, reinforcing the dual engine of competition and innovation, and strengthening industrial upgrading and financial agglomeration are key to promote Chinese household consumption upgrading.