Abstract: The report of the 19th National Congress of CPC proposes some specific measures to accelerate the construction of an innovative country, among them, the innovation of the scientific and technological system mechanism that corrects the distortion of factor allocation and promotes the transformation of scientific research results is the institutional guarantee for the innovation-driven development strategy. This paper theoretically analyzes the mechanism of the influence of price distortion on the innovation efficiency in the factor market. Taking the 30 provinces in China from 1998 to 2014 as the research object, it applies the stochastic frontier algorithm to measure the innovation efficiency. The findings show that the price distortion in the factor market has inhibited the innovation efficiency. It further divides the 30 provinces into eight economic zones and measures the degree of influence of factor market price distortion on the innovation efficiency of the eight regions respectively. The conclusions indicate that the factor market distortion has different influences on the innovation efficiency of different regions. Among them, the factor price distortion has a significant impact on the innovation efficiency of the five regions, i.e., the northeast, the middle reaches of the Yellow River, the middle reaches of the Yangtze River, Yunnan and the northwest, but less impact on the innovation efficiency of the rest three regions, i.e., the northern, the eastern and southern regions.

Key words: factor market price distortion; regional innovation efficiency; stochastic frontier model; eight economic zones