Joint Effects of New Energy Demonstration Cities and Low-Carbon City Pilots on Manufacturing Firms’ Green Total Factor Productivity: Supply Innovation or Cost Pressure?

Global climate governance is undergoing a rapid transformation, and energy systems are increasingly shifting toward low-carbon development. Against this background, improving manufacturing firms’ green total factor productivity (MFGTFP) is essential for achieving sustainable industrial development. China has introduced two major policy instruments: new energy demonstration cities (NEDCs) and low-carbon city pilots (LCCPs). NEDCs focus on optimizing the energy supply structure, whereas LCCPs seek to reduce carbon emissions through demand-side regulatory constraints. This study treated the joint implementation of NEDCs and LCCPs as a quasi-natural experiment and employed panel data from Chinese A-share listed manufacturing firms from 2007 to 2024. Using a multi-period difference-in-differences model and mechanism tests, we examined the effect of the joint implementation of these policies on MFGTFP. The empirical results show that the joint implementation of NEDCs and LCCPs significantly improves MFGTFP. This effect is more pronounced when NEDCs are introduced prior to LCCPs, particularly in cities with a higher government ecological governance capacity (GEGC) and in regions characterized by a lower carbon emission intensity (CEI). Mechanism analysis revealed that the joint effects of NEDCs and LCCPs operate through supply-side innovation and partially through demand-side cost-pressure channels. On the supply side, NEDCs promote green innovation (GI), thereby enhancing firms’ supply innovation. On the demand side, the evidence mainly reflects financing constraint (FC) alleviation rather than a positive capacity utilization (CU) channel. Together, these findings suggest that improvements in MFGTFP are driven by supply-side innovation incentives and partially by demand-side cost-pressure effects through FC alleviation. These findings provide firm-level evidence on how the joint implementation of energy and carbon policies promotes green productivity improvement.