Abstract: Domestic market connectivity is an important element of unimpeded domestic circulation, and an in-depth understanding of the role of domestic market connectivity in enhancing the welfare of inter-provincial trade from the perspective of the“five unities”is of far-reaching significance to the construction of a strong domestic market. By constructing an asymmetric multi-stage general equilibrium model, this study quantifies the impact of domestic market connectivity on the welfare enhancement of inter-provincial trade, and spatially deconstructs its production characteristics. The findings show that domestic market connectivity in general significantly promotes the growth of inter-provincial trade intensity, but there is still much room for improvement in the promotion of factor resource connectivity. Domestic market connectivity has enhanced the inter-provincial trade welfare, among which the interconnection of goods and services has the most significant effect on improving trade welfare, followed by transportation facilities, market systems, factor resources, and market supervision. The average increase in trade welfare for the eastern and northeastern regions is higher than that for the central and western regions due to the inter-connectivity of the domestic market. Under the multi-stage production mode, the overall average increase in trade welfare for the country is significantly higher than that of indirect production. Local governments should respond positively to the “five unities”initiative in light of the actual situation, promote the coordinated regional development through inter-provincial cooperation, and fully release regional comparative advantages through multi-stage production, so as to help achieve the goal of smooth and greater domestic circulation development and provide practical experience for domestic market connectivity and inter-provincial trade welfare enhancement.

Key words: domestic market, five unities, market connectivity, inter-provincial trade welfare