How market-based policy instruments can lead the green development transition: the impact of government green procurement on corporate green innovation

To establish a novel pattern of ecological civilization featuring harmonious coexistence between humans and nature and to achieve a green transition in economic development, both the impetus from corporate green innovation and the guidance from market-based policy instruments are indispensable. The study uses government green procurement—a prominent market-based policy tool —as an entry point to examine the influence of such instruments on corporate green innovation and development transformation. This research manifested that government green procurement remarkably enhances the quantity, quality, and efficiency of enterprises' green innovation. Mechanism analysis reveals that government green procurement drives innovation primarily by mitigating operational performance risks, alleviating financing constraints, and strengthening corporate willingness for environmental protection. Heterogeneity tests show that these effects are more pronounced in state-owned enterprises (SOEs), large corporations, and heavy polluting industries. Furthermore, extensibility analysis demonstrates that government green procurement fosters a synergy between ecological and economic efficiency. These findings provide critical practical insights into the institutional channels through which market-based policies influence the corporate green development transitions and related economic consequences. Consequently, this study offers valuable guidance for policymakers aiming to facilitate green innovation and drive a comprehensive green economic transformation.