Exploring the Demand-Pull Effect on Green Innovation and Its Spatial Spillover Effects: Evidence from 261 Chinese Prefecture-Level Cities

Abstract

In China’s evolving landscape of high-quality development, characterized by a shift toward greener and lower-carbon practices, green innovation plays an essential role. Among the determinants shaping green innovation, demand factors play a pivotal role in driving its progress. Drawing on the theory of demand-induced innovation, this study utilized panel data spanning from 2008 to 2020 from 261 Chinese prefecture-level cities to investigate the effects of demand factors on green innovation. It also made use of a spatial model to investigate the regulatory function that market segmentation plays in this complex interplay, as well as any possible spatial spillover effects of these demand factors on the dynamics of green innovation. The research findings reveal that both domestic and foreign demand exert a significant fostering effect on the development of green innovation, whereas the widening income gap plays a constraining role. And the influence of demand considerations on green innovation varies depending on the region and kind of patent. Furthermore, the influence of demand factors on green innovation is accompanied by spatial spillover effects and is subject to modulation by the extent of market segmentation. The insights obtained from this research offer practical implications for advancing green innovation and provide guidance for its better promotion.