Abstract: Using data from cities at the prefecture level and above from 2005 to 2020, this study employs a spatial Durbin model to examine the direct impact and spatial spillover effects of market potential and the institutional environment on urban common prosperity within a unified analytical framework of market potential, institutional environment, and common prosperity. The study explores the spatial attenuation boundaries of market potential and the institutional environment and the threshold moderating effect of the institutional environment. The findings are as follows: Expanding market potential significantly promotes the process of common prosperity through three transmission mechanisms: material capital allocation, industrial structure optimization, and foreign direct investment, with industrial structure optimization having the most
prominent intermediary effect. The promotion effect of market potential on common prosperity exhibits a threshold effect of the institutional environment; the more improved the institutional environment, the stronger the promotion effect of market potential on the development of common prosperity. Under the classification of city sizes, the promotion effect of market potential on the process of common prosperity shows significant heterogeneity. Compared with large and medium-sized cities, the promotion effect of market potential on common prosperity is more pronounced in megacities and super-large cities. The effective boundaries for the spillover effects of market potential and the institutional environment on common prosperity are 650 kilometers and 950 kilometers, respectively. Within this range, the spillover effects of both on common prosperity exhibit a rise-and-fall pattern of attenuation.

Key words: market potential, institutional environment, common prosperity, spatial metrology；attenuation boundary