This paper examines the segmentation of electoral markets in early 20th-century democracies, focusing on how it influenced electoral rule changes. We define segmentation as the extent to which parties share a common electorate and measure it using a novel ecological inference algorithm that estimates vote transfer probabilities at the district level. We hypothesize that traditional parties responded differently to increased competition from new mass parties based on market segmentation: highly segmented markets led to rule changes, while less segmented markets encouraged voter coordination. Updating the Rokkan-Boix hypothesis on the origins of proportional representation, we introduce a flexible framework centered on vote transfers shaped by deeper societal cleavages. Additionally, we quantify the electoral trade-offs constraining left- and right-wing parties in coordinating their electorates, showing that high trade-offs often precipitated reform. Using district-level data from Australia, Belgium, Denmark, Germany, the Netherlands, New Zealand, and the United Kingdom, we find strong evidence supporting our hypothesis.