Abstract: To develop digital economy is conducive to improving the innovation ability of enterprises, realizing economies of scale and scope, and reducing transaction costs. A perfect market economic system is conducive to creating a fair environment and improving the efficiency of social resources allocation at the macro level, stimulating industrial technological innovations and accelerating the diffusion of technology at the meso level, and improving the efficiency of enterprise resources allocation at the micro level. This paper conducts an empirical study based on the index of the development level of digital economy at the city level in China during the period of 2011-2020 and other data. The findings show that the digital economy can significantly improve the total factor productivity of enterprises, but its role will be slightly different according to the differences in ownership, industry, and the city where the enterprise is located. The digital economy can effectively enable the market to play a decisive role in resources allocation, and marketization is an important function mechanism for the digital economy to enhance the total factor productivity of enterprises. Therefore, it is necessary to lead the digital transformation of enterprises by setting the state-owned enterprises as the models, to drive the technological progress with high-tech industries as the leader, to enhance the level of digital inclusion based on the construction of smart cities, and to improve the high-level socialist market economic system by taking the development of the digital economy as an opportunity.

Key words: digital economy, total factor productivity, marketization