Starting from the political market framework, this research analyzes the factors influencing local government adoption of energy saving incentive mechanisms. The analytical unit is local municipal government (including special municipalities, counties, cities, townships, county-administered cities, and the self-government matters of mountain indigenous districts). The hypothesized factors are categorized into 1) the demand-side variables of the market consumers and 2) the supply-side variables of governmental machines. The former could be the perception of policy preference of local citizens and interest groups. The later could be the observed factors relevant to local government policy actions-including policy priority, interlocal collaboration, policy diffusion, financial resource and human resource. General survey is conducted with the population=226 municipalities. The total observation N=156 and the responsive rate=69.03%. The authors employs structural equation models to examine the path effect among the variables. Research findings indicate that the perception of market demands for the energy saving movement directly and indirectly influences the adoption of the incentive mechanisms in local governments. In the supply side, except the priority of energy policies, other factors including interlocal collaboration, policy diffusion, financial and human resource could generate a significant effect on the adoption of the incentive mechanisms.