The green growth mode of modern economy is affected by both policy and market, but previous studies have lacked a comparison between the two effects on green economy development. Which is the leading factor of green growth: policy or market? Using the Panel Smooth Transition Regression (PSTR) model and the twelve-year data of more than 200 prefecture-level cities in China, we compared and analyzed the linear and non-linear effects of environmental regulation and marketization degree on green total factor productivity (GTFP). The results show that: (1) both environmental regulation and marketization degree have a non-linear promoting effect on GTFP. (2) GTFP is mainly market-driven rather than policy-guided. (3) Environmental regulation and marketization promote the improvement of GTFP through the industrial upgrading effect and the innovation development effect, respectively. This paper makes up for the comparative analysis gap of factors in the field of green growth and extends from the single determination of influencing factors to the importance of the comparison of influencing factors with the transition perspective. The conclusions provide a reference for the green development of countries and regions, emphasizing the importance of green development policies adapting to local conditions and time and providing evidence for market-oriented green economy development.
Keywords: PSTR; environmental regulation; green total factor productivity; marketization.