Substitution or Appropriation? The Impact of Capital Deepening on Agricultural Price Volatility in China

In the context of accelerating the construction of an agricultural powerhouse, exploring the endogenous stabilization mechanisms of important agricultural product prices holds significant practical relevance. Based on province-level panel data from China spanning 2004 to 2022, this paper systematically investigates the impact and internal mechanisms of capital deepening on the price volatility of important agricultural products. We analyze this through the dual perspectives of “substitution” and “appropriation” effects, utilizing panel fixed-effects and threshold models. The robust findings reveal that capital deepening exerts a significant stabilizing effect on price volatility, confirming the dominance of the substitution effect. Heterogeneity analysis indicates this price-stabilizing effect is strongest in the large-scale group and more pronounced in major consuming regions than in producing regions, reflecting structural differences at both scale and regional levels. Nonlinear analysis further uncovers that this stabilizing effect exhibits diminishing marginal effects and is subject to a double-threshold moderating effect from hog price volatility. This study provides a novel theoretical perspective on capital deepening’s role in agricultural market regulation and offers vital policy insights for guiding capital deepening, promoting moderate-scale operations, and improving cross-variety synergistic regulatory mechanisms.