Abstract: Resolving the contradiction between balanced regional economic development and the achievement of carbon emission reduction targets is an important prerequisite for promoting regional market integration and formulating emission reduction policies. Nevertheless, few studies have taken a spatial spillover perspective to explore the mechanisms by which market segmentation affects carbon emissions. Drawing upon China's provincial panel data from 2006 to 2018 and employing spatial Durbin model, this paper tests the direct and indirect (spillover) effects of market segmentation on carbon emissions and further reveals the effect mechanism from a spatial spillover perspective. The findings show that market segmentation has a significant impact on carbon emissions. Local market segmentation has a positive direct effect on carbon emissions while neighboring market segmentation has a negative spillover effect on carbon emissions. Market segmentation promotes the inward shift of carbon emissions closer to home and limits the outward shift of carbon emissions closer to home, but does not inhibit the growth of carbon emissions. In terms of effect mechanisms, market segmentation significantly affects carbon emissions through the effects of economic scale change, industrial restructuring, energy structure optimization and technological innovation. In addition, there is spatial heterogeneity in the impact of market segmentation on carbon emissions between the North and the South, with it being more pronounced in the North.

Key words: market segmentation, spatial spillover, carbon emissions, impact mechanisms, spatial Durbin model