For a long time, the fragmentation of the domestic market has significantly impeded the unified allocation and comprehensive utilization of domestic resources. The negative list system for market access delineates the boundary of local government actions in terms of “negative lists”, constraining local governments’ capacity to impose administrative barriers or intervene in capital inflows and enterprise entry. This approach effectively lowers market entry barriers, dismantles market fragmentation, and facilitates market integration.

This paper constructs a multi-time DID model based on the implementation of the negative list system for market access, and examines the relationship between the institutional opening-up policy and market integration. The results show that the negative list system significantly promotes inter-provincial market integration. Mechanism testing shows that this promotion effect is mainly achieved by reducing local protectionism, optimizing resource allocation, and promoting regional specialized production. Further analysis shows that the market integration effect under bilateral coordinated opening-up is much more significant than that under unilateral opening-up. Institutional opening-up effectively weakens the geographical barrier of market integration. The negative list system promotes market integration between provinces in the eastern and central regions, as well as between the eastern and central/western regions, but does not promote market integration within the western region and between the central and western regions.

The contributions of this paper are as follows: First, it investigates for the first time the concrete manifestations regarding the market integration effect, enriching the relevant literature concerning the evaluation of policy effects related to the negative list system for market access. Second, it identifies two primary pathways through which the negative list system can facilitate market integration, which not only elucidates the institutional advantages of the system in balancing governmental authority with market mechanisms, but also promotes constructive interactions between government entities and market participants. Third, it examines how inter-provincial spatial distance, trust environments among provinces, and knowledge structures contribute to realizing effective market integration under an open institutional framework, prompting deeper reflection on understanding the synergy between formal systems and fostering a conducive soft-market environment.