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The synergistic effects of demand-pull and supply-push policies on firm’s green innovation: Evidence from China

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  • Ma, Jie
  • Chen, Xudong
  • Feng, Tong
  • Xu, Bing
  • Lu, Hongyuan
  • Guo, Quan

Abstract

Addressing escalating environmental challenges requires effective government intervention to guide firms toward green innovation. This study examines how such policies influence firms’ green innovation, focusing on the dual roles of supply-side (environmental subsidies) and demand-side (green public procurement) interventions. Using a dataset of Chinese A-share listed firms from 2015 to 2022, we find that the joint implementation of these policies generates a significant positive synergy, surpassing the additive effects of isolated interventions. The synergy effects are more pronounced in non-heavy-pollution industries, state-owned firms, and large-scale firms. Mechanism analysis reveals that this synergy operates by enhancing environmental strategic awareness, relaxing financing constraints, and mitigating the dual uncertainty of R&D and market returns. Additionally, green public procurement generates spillover effects at both industry and city levels, whereas environmental subsidies generate spillovers only within industries. Our study deepens the understanding of supply-side and demand-side green transformation support policies and provides important insights for policymakers aiming to promote sustainable development.

Suggested Citation

  • Ma, Jie & Chen, Xudong & Feng, Tong & Xu, Bing & Lu, Hongyuan & Guo, Quan, 2026. "The synergistic effects of demand-pull and supply-push policies on firm’s green innovation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 527-541.
    • Handle: RePEc:eee:ecanpo:v:89:y:2026:i:c:p:527-541
    DOI: 10.1016/j.eap.2025.12.027
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